Indian, ASEAN stocks spur Asia300 Index to record
South Korean shares also gain as China yields to new market drivers
TOKYO -- Stellar performances by Indian and Southeast Asian stocks propelled the Nikkei Asia300 Index to a record this week.
The index, which tracks over 300 promising companies in 11 Asian economies, climbed 16% since its December 2016 introduction to hit 1,221.26 points Wednesday, outperforming the Nikkei Stock Average's roughly 7% gain over that period. Historical reference data puts the Asia300 components at their highest since May 2015. The index closed Friday at 1,214.36, slipping 0.16% from the day before.
China drove the market two years ago, but Chinese stocks' pulling power has ebbed following Beijing's surprise devaluation of the yuan in summer 2015.
Indian stocks have taken center stage instead. The benchmark BSE Sensex index rose to a record Wednesday and briefly topped that figure early Friday. Automotive leader Maruti Suzuki India ascended to its all-time high Tuesday.
Other key Asian stock indexes are reaching new heights as well. South Korea's KOSPI hit a record May 11, buoyed by Samsung Electronics. The Jakarta Stock Exchange Composite Index surged to a record Friday.
"The pace of U.S. interest rate hikes has been slower than expected," Yohei Miura of Mitsubishi UFJ Morgan Stanley Securities said, citing a factor behind the broad rise in Asian stocks.
Aggregate net profit for the Asia300 components appears likely to grow in fiscal 2017 for the first time in three years.
Emerging economies are seen growing 4.5% overall in 2017, the International Monetary Fund says, much faster than the 2% expansion for advanced economies.
In emerging economies, "higher resource prices are providing additional fuel to the mild growth that has been led by domestic demand," Makoto Saito of the NLI Research Institute said.
Not a small number of those economies have seen their current-account deficits decline as well. This would let them weather the impact better, should U.S. interest rates go up further.
But the Chinese economy could pose risks. Focusing on the National People's Congress of the Communist Party in the fall, Beijing is rolling out economic stimulus, relegating much-needed structural reforms such as trimming excess production equipment and debt reduction to the back burner. Broader Asia may take a hit from a slowdown in China.