TOKYO: Shares in Japan and Shanghai rallied to fresh 2 1/2-month highs Monday, lifted by a weaker yen and stimulus hopes respectively, while worries about China’s slowdown drove other Asian markets lower. Japan’s Nikkei Stock Average finished up 2% at 19,642.74, its highest close since late August.
The Shanghai Composite Index was up 1.6% at 3645.88. That adds to a 6% jump the previous week. Hong Kong’s Hang Seng Index was up 0.1%. Australia’s S&P/ASX 200 was down 1.8% while South Korea’s Kospi lost 0.8%.
Over the weekend, data showed Chinese exports in October fell for the fourth consecutive month, by 6.9% year-over- year in dollar terms, after a drop of 3.7% in September. The October figure was worse than the median 4.1% decline forecast in a Wall Street Journal poll.
In China, investors are also assessing the impact of regulators’ announcement late Friday of plans to lift a ban on initial public offerings, after suspending them in July in the heat of a share selloff.
China’s stock regulator has adjusted the timing of public offerings in the past—depending on how the market is trading—introducing new listings when it believes investor appetite is healthy enough. Since 1990, the market has declined five times and risen four during periods when regulators allowed companies to list, according to a note by Bank of Communications Ltd.
“From the perspective of regulators, they think the rally will continue, which is why they will resume IPOs,” said Louis Lu, fund manager at CSOP Asset Management. Last week, the Shanghai Composite Index entered bull market territory—defined as a rise of 20% from a recent low. Analysts say its cross above 3,500 could inspire more local investors to buy shares again. Mr. Lu said the Chinese export data could pressure authorities to step up stimulus, which would boost markets later Monday.
“Our view is the Chinese market will rally until December before the Federal Reserve [raises] rates,” he said. A strong October jobs report in the U.S. on Friday firmed expectations that the Federal Reserve could raise interest rates as soon as next month. Patchy data from previous weeks had led some to believe that time frame could be pushed to next year.
On Saturday, China’s central bank reported that foreign-exchange reserves in October rose by $11.39 billion to $3.526 trillion, ending a five-month streak of monthly declines. Economists said it signaled weaker expectations among investors that the yuan would depreciate further and that officials’ efforts to stem illegal outflows have met some success.
In the U.S., shares were little changed Friday, but underlying sectors swung sharply as investors moved money out of income-yielding companies, which do well during periods of low interest rates, and into banks, whose profits are expected to increase as rates rise.
In Asia, the Malaysian ringgit traded at its weakest against the dollar in about a month, down 1.3% to 4.3620 per U.S. dollar. The U.S. dollar jumped across the board in the wake of the jobs data release.
Shares in Japan rose as the yen reached its lowest level since late August, with the dollar trading at Y123.33. The dollar was at around Y121.80 in Asia Friday before the U.S. jobs report. A weaker yen boosts shares of exporters, whose goods become cheaper with a weaker currency. Japanese insurance firms gained on expectations of higher U.S. interest rates, with Dai-ichi Life Insurance Co. Ltd. up 5.1%.
Shares in Australia fell, as commodity prices continued to decline. Iron ore prices Friday hit a four-month low of $47.40 per ton, according to The Steel Index, while the price for Brent crude oil, the global benchmark, fell 1.2% on concerns of a supply glut. Both trends are set to weigh on mining and energy stocks, particularly as the dollar strengthens with increasing expectations of higher U.S. rates.
Shares of BHP Billiton Ltd., the country’s largest commodity-producer, were down 5.6% after a deadly dam break at one of its jointly owned mines in Brazil. The official death toll of three is expected to rise, with at least 28 people confirmed missing. The mine’s operator, Samarco Mineraç ã o SA, is jointly owned by Vale SA of Brazil and BHP Billiton.
Shares of Santos Ltd. were halted pending plans to issue new shares to existing investors and Chinese private-equity firm Hony Capital. Together with the sale of stake in a gas field to Japan’sMitsui & Co., the debt-laden firm will raise 3.5 billion Australian dollars ($2.46 billion).
In Japan, shares of Toshiba Corp. are down 7.5%, after the company said on Saturday that it lost 90.49 billion Japanese yen ($735 million) during the April-to-September period, compared with an operating profit of Yen137.87 billion a year earlier. The firm’s consumer-electronics business continues to struggle while profit also fell at its cash-cow flash-memory business.
