Asian stocks advance despite poor China data

Asian stocks rose as China’s weakest growth since 2009 spurred a rally in the nation’s industrial shares amid speculation the government will boost stimulus measures. The MSCI Asia Pacific Index added 0.7 per cent to 119.66 at 3:09 p.m. in Tokyo, reversing an earlier loss of 0.5 per cent. The Shanghai Composite jumped 3.2 per cent as industrial companies surged amid speculation of state-fund buying and prospects for increased stimulus.

China’s industrial production, retail sales and fixed-asset investment all slowed at the end of the year, while gross domestic product expanded 6.8 per cent in the fourth quarter. China Communications Construction Co. surged by the daily limit in Shanghai, while China Railway Group Ltd. posted its biggest advance in three months. The Hang Seng China Enterprises Index of mainland stocks traded in Hong Kong gained 2.5 per cent, while the city’s benchmark Hang Seng index rose 1.4 per cent. E- mini futures on the Standard and Poor’s 500 Index jumped 1 per cent. Investors need to ask “what is the next policy action in terms of stimulus from the Chinese,” Didier Duret, chief investment officer at ABN Amro Private Banking, told Bloomberg TV in Hong Kong. “It will probably come into infrastructure -- railways, telecoms and air space infrastructure. That’s the area that should benefit.”

Chinese shares fell into a bear market last week on waning confidence that the government can manage the country's transition to a new growth model and to a more freely traded currency, while government bond yields retreated to a record low. The MSCI Asia Pacific gauge is trading near its lowest level since September 2012 and has lost 9.3 per cent in 2016 as concern about the outlook for global growth roils markets worldwide. China's securities regulator denied a Reuters report that its Chairman Xiao Gang offered to resign. Reuters reported that the chairman of the China Securities Regulatory Commission submitted his resignation last week, citing unidentified people. It wasn't clear whether the government had accepted his offer, the news agency said.

“The market was pricing in much worse,” said Nader Naeimi, Sydney-based head of dynamic markets at AMP Capital Investors Ltd., which oversees about $114 billion. “The markets had intense fears over China. We might see some up and down during the day, but it shows that China isn’t broken.” Japan’s Topix index closed with a gain of 0.2 per cent, after rising as much as 0.5 per cent and dropping more than 0.9 per cent. South Korea’s Kospi Index added 0.6 per cent. Taiwan’s Taiex index increased 0.6 per cent while Singapore’s Straits Times Index rose 0.4 per cent. The Nikkei 225 Stock Average advanced 0.6 per cent. Australia’s SandP/ASX 200 Index added 0.9 per cent. Both are down more than 18 per cent from their 2015 peaks, close to the 20 per cent level that would send them into bear markets. New Zealand’s SandP/NZX 50 Index gained 0.4 per cent. The MSCI All-Country World Index slipped to its lowest point since July 2013 on Monday, as banks drove the Stoxx Europe 600 Index to a 13-month low. Markets in the US reopen Tuesday after a holiday.

Bloomberg