The Strategist

Asian Stocks Soared to Multi-Year High Records

03/17/2015 - 20:56

Tokyo and Shanghai stocks rallied on the back of Dollar weakness.

Asian Stocks Soared to Multi-Year High Records
Tokyo and Shanghai hit new record highs on 17 March 2015, driven by weak US economic data. It is a clear indication that Federal Reserve will not be able to take the most awaited decision to hike the interest rates. The Wall Street rallied more than 1% as investors steered by a pause in strengthening of US dollar. The Bank of Japan is said to continue its quantitative easing measures, while Indonesia will keep the rates steady after drawing off a surprising move of easing.

Bank of Indonesia shocked the world markets by interest rate cut for the first time over a span of 3 years, mainly driven by oil-led slowdown in rates of inflation in an effort to steer economic growth through monetary policy easing. Markets will be observing that the Central Bank policy makers in the US are maintaining the “patient” promise or not.

Japan’s index Nikkei 225 outpaced other equity markets by attaining a 15 year heights to 19,428 at one point. Japan gained the most out of slumping crude oil prices, as net oil imports of the nation is at 4.2% which is the highest among the developed nations. Among all other markets across the globe, the Japanese market is witnessing best revisions in earnings estimates. With rise in investor’s confidence over the stability of Japanese economy, the real estate and financial companies were leading the stock market. Besides the climb in bank stocks signals boost in confidence that the economy is now out of deflation.

With an annual growth of 1.5% in fourth quarter 2014, Japanese economy has emerged out of the recession. However, it is expected that the healthy earnings growth in Japan will continue over the next 18-24 months. Bank stocks were the top performers in Tokyo stock exchange. Besides, the real estate companies soared to its highest mark since January 2014.

Among the top performers, Toyota Motors climbed 1.1% to a record high mark. Among the Japanese blue chip companies, Sony gained 2.7%, while Toshiba and Canon recorded an increase of 1.3% and 0.9% respectively.

With Shanghai composite rising to 3,476 mark, the Chinese stocks hit the record a fresh of 7 year highs. Despite disappointing economic data, the monetary policy reforms are likely to accelerate the nation’s growth. The major beneficiary for the Chinese market, was the announcement by Premier Li Keqiang in the annual legislative meeting about the government measures taken for easing, that sent strong signals across the nation. Moreover, it was said that goal of the government is to maintain healthy growth in the real estate sector which was apparently struggling in the first 2 months of this year. Besides, Mr. Li gave assurance that he will continue to provide support to the economy through concrete measures in case the deceleration in the growth hurts public’s income and employments. Huatai Securities, Everbright Bank and Poly Real Estate were the top gainers in Shanghai. The world, luggage manufacturer, Samsonite rallied 0.4% in HongKong. However, the European stock market tumbled down from seven year highs due to merger activities in telecom sector.

Tags : Asian Stocks