By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) -- Mainland Chinese and Hong Kong stocks
jumped to lead most Asian markets higher Monday amid hopes Beijing
would step in to support the economy.
The Shanghai Composite added 2.4%, its biggest percentage gain
in more than a month, and Hong Kong's Hang Seng Index advanced 2.1%
for its highest finish since June 4.
"The recent batch of Chinese indicators from last week is still
fresh in the minds of investors, who are now feeling more at ease
about the growth prospects of the world's second largest economy,"
said Tim Waterer, a senior trader at CMC Markets.
Data released last week showed a better-than-expected
improvement in China's trade indicators and in monthly industrial
output.
Meanwhile, Hong Kong daily newspaper South China Morning Post
reported Monday that Beijing was "quietly offering financial
stimulus" to key cities and provinces to support the local
economies. The report, citing unnamed government sources, said that
while policy makers had repeatedly denied the possibility of
national stimulus, they didn't rule out "unofficial economic
stimulus" to help key local economies.
Andrew Sullivan, director of sales trading at Kim Eng Securities
said hopes for a stimulus led to a spike in stocks, triggering
stop-loss orders on investors' short sales.
The bounce followed data released late Friday, showing Chinese
banks made 699.9 billion yuan ($114.3 billion) (USDCNY) worth of
local-currency loans in July, beating expectations.
Construction-related stocks soared on Chinese markets. Shares of
Anhui Conch Cement Co. jumped 4.6%, and property developer Gemdale
Corp. rose 4.4% in Shanghai.
In Hong Kong, Anhui Conch advanced 4%, Aluminum Corp. of China
Ltd. (ACH) jumped 6%, and China Resources Land Ltd. (CRBJF) gained
2.3%.
The strong advance also helped prop up some other regional
markets, with Australia's S&P/ASX 200 finishing 1.1% higher,
and South Korea's Kospi adding 0.2%.
However, Japan's Nikkei Stock Average ended 0.7% lower. The
decline followed data showing slower-than-expected economic growth
in the April-June quarter.
The Japanese government said Monday the economy grew at an
annualized rate of 2.6% in the previous quarter. The expansion
marked a third straight quarter of growth but was a full percentage
point short of the 3.6% improvement estimated in a Dow Jones
Newswires survey.
"The economic conditions have turned out less favorable or more
tricky for the scheduled consumption-tax hikes," said Crédit
Agricole economist Kazuhiko Ogata.
Ogata cited uncertainty about the plan's implementation
following Japan's Prime Minister Shinzo Abe instructions earlier
for ministers to evaluate the impact from the planned consumption
tax hikes before making a final decision on the increase.
Japan's parliament has already approved an increase in the
consumption tax to 8% by April 2014 and to 10% by October 2015,
from 5% at present. The tax increase, aimed at boosting the revenue
of the highly indebted Japanese government, is expected to weigh on
the nation's economic recovery.
Financial shares declined in Tokyo, with Daiwa Securities Group
Inc. (DSEEY) losing 2.3%, Nomura Holdings Inc. (NMR) sliding 3.1%,
and Mizuho Financial Group Inc. (MFG) shedding 1.4%.
Bridgestone Corp. (BRDCY) gained 2.8% after the tire maker
raised its profit forecast for the fiscal year ending next March,
while Citizen Holdings Co. surged 16.6%, boosted by strong results
and an increase in its own profit outlook.
Over in Sydney, Australian miners posted solid gains following
an increase in metals prices Friday, as well as the recent batch of
Chinese economic data. BHP Billiton Ltd. (BHP) gained 2.4% and Rio
Tinto Ltd. (RIO) added 2.6%.
"With uncertainty over [U.S.] Federal Reserve stimulus measures
lurking in the background, markets are struggling to find
direction," said Rivkin Securities global analyst Tim Radford.
"Given it's a relatively quiet economic week ahead, we could expect
to see equities track sideways."
Newcrest Mining Ltd. (NCMGF) jumped 7.9% despite posting a
record annual loss and scrapping its dividend payment, as its
profit after stripping off one-time impairment charges came ahead
of expectations.
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