Asian stocks rise amid Japan stimulus report

People walk past an electric quotation board displaying the Nikkei key index of the Tokyo Stock Exchange in front of a securities company in Tokyo on July 27, 2016.
People walk past an electric quotation board displaying the Nikkei key index of the Tokyo Stock Exchange in front of a securities company in Tokyo on July 27, 2016.PHOTO: AFP

SINGAPORE (BLOOMBERG) - Asian stocks climbed for a third day as Japanese shares rallied on a report that the government is preparing a stimulus package worth more than 28 trillion yen (S$360.1 billion). Chinese equities in Shanghai tumbled the most in six weeks.

The MSCI Asia Pacific Index added 0.2 per cent to 134.84 as of 4:10 p.m. in Hong Kong. The Topix index rose 1.1 per cent as Prime Minister Shinzo Abe, speaking in the southern city of Fukuoka on Wednesday, said the measures would be compiled next week, Kyodo News reported.

The Shanghai Composite Index was the worst benchmark decliner in Asia after a report about possible curbs on wealth-management products added to concern that regulatory efforts to reduce risks in the financial system will limit flows into equities.

Asian shares are poised for the best monthly gain since March amid bets that central banks around the world will take steps to limit any fallout from the UK's vote to exit the European Union. The Bank of Japan is widely expected to add to stimulus at the end of a two-day meeting on July 29. The Federal Reserve is likely to leave interest rates unchanged at the end of its meeting Wednesday, even as futures traders are predicting a 49 per cent chance borrowing costs will rise by December.

"Central bank moves this week will still remain key to market direction," said Nicholas Teo, a strategist at KGI Fraser Securities Pte in Singapore. BOJ Governor Haruhiko Kuroda's "show is especially important. Seeing how much expectations have been building in the markets for a generous helping of stimulus, disappointment in the actual announcement may have a pronounced negative effect," he said.

The Topix advanced for the first time in four days and the yen weakened 1.1 per cent. The package by the government today will include 13 trillion yen in low-interest loans, FNN reported earlier. It must be presented to the parliament, where approval is a formality because the ruling coalition has a majority in both houses.

Taiwan's Taiex index gained 0.4 per cent to a one-year high, South Korea's Kospi index slipped 0.1 percent and Singapore's Straits Times Index added 0.2 per cent. Hong Kong's Hang Seng Index increased 0.4 per cent. Australia's S&P/ASX 200 Index closed little changed, while New Zealand's S&P/NZX 50 Index fell 0.1 per cent. In Vietnam, the stock gauge advanced 1.2 per cent.

The Shanghai Composite tumbled 1.9 per cent, its first drop in three days. Indonesia's Jakarta Composite Index climbed 1.2 per cent, heading for its highest close since May 2015, after President Joko Widodo picked Sri Mulyani Indrawati as his new finance minister.