Asian markets are headed for their best month in more than six years on Friday, fueled by hopes that central banks around the world will inject stimulus into their economies.
But investors have grown weary over the past week and momentum has flagged.
The Nikkei 225 gained 147.39 points, or 0.8%, to 19,083.10, its highest closing level in two months. The Nikkei closed out the month with gains of 10%, its best monthly performance since April 2013.
In Hong Kong, the Hang Seng moved downward 179.9 points, or 0.8%, to end the week at 22,640.04.
The Hang Seng Index is on track to gain 9%, after five-straight months of losses. However, the Hang Seng Index is down 2% this week, after rallying for four straight weeks.
The Bank of Japan’s decision Friday to keep its monetary policy unchanged demonstrates why: Hopes for more easing could easily disappoint if policy makers don’t deliver.
Japan’s central bank refrained from introducing further easing, keeping its annual asset purchase target at 80 trillion yen ($660 billion U.S.), despite building expectations of stimulus amid disappointing economic data.
Despite the Bank of Japan’s decision Friday, economists aren’t wiping prospects for more easing off the table. Credit Suisse economist Takashi Shiono said he believes the central bank probably will wait until next spring, when it has a clearer picture of inflation that isn’t distorted by weak oil prices.
In Hong Kong, stroller and car-seat maker Goodbaby International Holdings Ltd. 1086, +2.29% and infant-formula maker Biostimes Interntional Holdings Ltd. both rose roughly 5%. Shenzhen-listed Beingmate Baby & Child Food Co. rose by the 10% daily maximum set by Chinese regulators.
In Japan, the yen traded as strong as ¥120.40 to one U.S. dollar following the Bank of Japan’s announcement. It has since weakened back to ¥120.99, roughly flat compared with its level late Thursday in Asia.
CHINA
October’s momentum is a turnaround from the summer months, when fears about China’s slowdown rocked global markets. Despite the sharp rebound, investors wary of policy makers’ limitations have said markets already have priced in the potential benefits of easing.
The CSI 300 in Shanghai eked up 0.77 points to 3,534.08. The Shanghai Composite fell 0.9% this week, snapping three weeks of gains, even after the People’s Bank of China cut interest rates last Friday for the sixth time since November.
On Thursday at the conclusion of its annual meeting, China’s Communist Party approved a five-year plan that vows, among other goals, to encourage consumption.
After the close of Asian markets Thursday, Chinese authorities also announced they would abandon the country’s one-child policy, instead allowing all Chinese couples to have two children. While officials didn’t provide a time frame, stocks are already moving in anticipation of a baby boomlet.
China’s central bank appears to have been propping up the offshore Chinese yuan, which now trades at its strongest level since mid-October. The U.S. dollar traded as low as 6.3402 yuan on Friday, roughly flat with Thursday’s close in Asia. It gained 0.6% a day earlier.
Traders say the bank is trying to close the gap between the offshore and onshore yuan, ahead of the International Monetary Fund’s decision in November on whether to include the yuan into its basket of global reserve currencies. Even if the IMF approves yuan inclusion this year, it would only officially be added to the basket late next year.
While the onshore Chinese yuan has been steadier this month, it suddenly rose to its strongest level in three weeks Friday afternoon, last at 6.3269 to one U.S. dollar on Friday.
The onshore yuan last at 6.3250, up 0.5% compared with Thursday’s close.
In other markets
The Kospi index in Korea lost 4.69 points, or 0.2%, to 2,029.47
Taiwan’s Taiex index slid 16.77 points, or 0.2%, to 8,554.31
In Singapore, the Straits Times Index dropped 3.16 points, or 0.1%, to 2,998.35
The NZX 50 shed 16.6 points, or 0.3%, to 5,986.37
The ASX 200 fell 27.42 points, or 0.5%, to 5,239.44
