Asian Stocks Climb to Erase Brexit Loss as Commodity Shares Gain

(Bloomberg) -- Asian stocks rose for a fourth day as commodity producers rallied and speculation grew that central banks will take steps to ease the economic fallout from the shock U.K. decision to leave the European Union. 

The MSCI Asia Pacific Index added 0.7 percent to 130.56 as of 4:03 p.m. in Hong Kong, set for its steepest four-day gain in almost three months. The advance erased losses sparked by the so-called Brexit vote. Indian stocks approached a bull market, Shanghai shares rose to a two-month high and Vietnam's stock gauge reached the highest level since 2008.

Asian equities are extending their best weekly advance since April as central banks for Europe, Japan and the U.K. indicated they are prepared to loosen policy, while diminishing prospects for higher U.S. borrowing costs this year spur demand for riskier assets in developing nations. The Bloomberg Commodity Index gained to the highest level in almost a month.

“We advise our clients to begin accumulating stocks now as the concern about Brexit has already faded and most investors view its impact on emerging markets will be much less than those in Britain and Europe,” said Jitra Amornthum, the head of research at Finansia Syrus Securities Pcl in Bangkok. “Emerging markets may also begin to attract some funds that will probably continue to move out Europe. And there are expectations of more monetary stimulus from most central banks.”

Japan's Topix Index advanced 0.6 percent, reversing losses of as much as 0.6 percent, as exporters gained after the yen slid 0.1 percent against the dollar. While most Asian markets have recovered or are close to recouping their losses from Brexit, Japan is little more than halfway to reaching its pre-referendum level. The Topix index climbed 4.2 percent last week, its best performance since mid-April.

The S&P BSE Sensex rose to an eight-month high and is within 1 percent of entering a bull market. Foreigners bought $771 million in Indian stocks in June, a fourth month of net inflow on optimism an improving economy will bolster corporate earnings.

Shanghai Rally

Vietnam equities climbed for a sixth day in the longest rally since April. The Shanghai Composite Index jumped 1.9 percent and Hong Kong's Hang Seng Index resumed trading after last Friday's holiday, erasing losses triggered by Brexit. 

South Korea's Kospi Index and Taiwan's Taiex index gained at least 0.3 percent. New Zealand's S&P/NZX 50 Index rose 0.2 percent, while Singapore's Straits Times Index advanced 0.8 percent. Markets in Indonesia are shut for the entire week.

Australia's S&P/ASX 200 Index climbed 0.7 percent. A national election Saturday left neither major party with enough seats to form a majority government, potentially increasing risks to the country's top credit rating. Ballot counting doesn't resume until Tuesday, and for now neither Malcolm Turnbull's Liberal-National coalition nor the opposition Labor Party can form government.

Commodity-led Rally

BHP Billiton Ltd., the world's biggest mining company, rose 2.3 percent in Sydney as industrial metals from nickel to copper rallied. Wynn Macau Ltd. and MGM China Holdings Ltd. rose at least 3.8 percent in Hong Kong after data released on Friday showed gaming revenue in the former Portuguese enclave fell less than analysts' estimates in June. Japanese exporters advanced on a weaker yen, with Sony Corp and Honda Motor Co. rising more than 1 percent.

U.S. markets are shut for a holiday. The S&P 500 Index had its best week since November, as a 0.2 percent gain on Friday trimmed its decline since the U.K. vote on June 23 to 0.5 percent.

--With assistance from Anuchit Nguyen To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net. To contact the editors responsible for this story: Jeff Sutherland at jsutherlan13@bloomberg.net, Chan Tien Hin, Ravil Shirodkar