HONG KONG (MarketWatch) — A sharp and sudden rebound for Chinese stocks in afternoon trading boosted major Asian markets Wednesday, helping them overcome disappointment after Eurogroup leaders failed to agree on conditions to release the next tranche of financial aid to Greece.
The Shanghai Composite /zigman2/quotes/206600939/delayed CN:000001 -3.38% , which dropped below the psychologically-important 2,000-point level earlier in the session, bounced back to finish 1.1% higher at 2,030.32 on a wave of buying in the afternoon session.
“That is a sign that China will not let the A-share market to fall off the cliff,” said Francis Lun, managing director at Lyncean Holdings in Hong Kong. “I think the Chinese government must be watching the market closely... What they can do is to get the Social Security funds to buy shares.”
The Shanghai index hasn’t seen a finish below 2,000 since the height of the global financial crisis in January 2009.
The recovery in Shanghai also helped some other regional markets pare losses or recover gains in the wake of news that the euro-zone’s financial ministers and the International Monetary Fund weren’t able to reach an agreement on the conditions under which they will disburse the next installment of financial aid to Greece.
The Eurogroup now plans to reconvene on Monday. Read: Eurogroup to meet again after no pact on Greek aid.
Japanese shares had let most of its early gains slip away and South Korean stocks reversed their advance following the Eurogroup’s announcement, around noon in Hong Kong. But they managed to recover somewhat.
The Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -4.01% ended 0.9% at 9,222.52 in Tokyo, after dropping as low as 9,161.21 during the session. Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -2.50% , up just 0.2% at the lunch break, finished 1.4% higher.
Elsewhere, South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -2.84% fell 0.3%, Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -3.28% slipped 0.4% and Taiwan’s Taiex dropped 0.8%.
“Markets had been trading cautiously with the potential for an unfavorable outcome from the meeting keeping some investors at bay,” said Stan Shamu, a market strategist at IG Markets, adding that regional stocks had “lost their grip” following the news.
Gains in Shanghai were spread across sectors, with Shanghai Industrial Development Co. /zigman2/quotes/208864798/delayed CN:600748 -3.75% jumping by the day’s 10% limit, shipping firm China Cosco Holdings Ltd. /zigman2/quotes/208833970/delayed CN:601919 -4.48% /zigman2/quotes/209913760/delayed CICOY +0.53% rising 7.6% and Haitong Securities Co. /zigman2/quotes/203443667/delayed CN:600837 -5.76% gaining 3.6%.
In Hong Kong, China Construction Bank Corp. rose 3.4% and foods company Want Want China Holdings Ltd. /zigman2/quotes/203844092/delayed HK:151 -1.63% gained 2.8%.
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Shares of heavyweight HSBC Holdings PLC /zigman2/quotes/202687335/delayed HK:5 -2.30% climbed 1.3%, after The Wall Street Journal reported that the lender was in talks with China’s sovereign-wealth fun to sell its stake in Ping An Insurance Group Co.
Ping An /zigman2/quotes/210315058/delayed HK:2318 -2.60% /zigman2/quotes/202212125/delayed PNGAY -1.47% , which had dropped in the last two trading sessions amid concerns about the possible sale, advanced 0.8%.
In Tokyo, exporters gained on the back of the yen’s recent weakness against major currencies. Toyota Motor Corp. /zigman2/quotes/203803129/delayed JP:7203 -4.56% /zigman2/quotes/200537742/composite TM -2.76% climbed 2.3%, Tokyo Electron Ltd. /zigman2/quotes/202883609/delayed JP:8035 -5.42% /zigman2/quotes/200298228/delayed TOELF -2.60% added 1.2% and industrial robot maker Fanuc Corp. /zigman2/quotes/209410825/delayed FANUY -4.75% /zigman2/quotes/202054799/delayed JP:6954 -4.44% rose 1%.
In data released 10 minutes ahead of the stock-market open, Japan’s Finance Ministry reported a 6.5% year-on-year drop in exports, fueled by another tumble in shipments to China, amid tensions between the two nations. Read: Japan trade deficit narrows by less than expected.
In Seoul, KB Financial Group Inc. /zigman2/quotes/208188987/delayed KR:105560 -1.65% /zigman2/quotes/200043823/composite KB -1.09% fell 1.6% and Hyundai Heavy Industries Co. /zigman2/quotes/206598861/delayed KR:009540 -3.26% dropped 1%. In Taipei, Hon Hai Precision Industry Co. /zigman2/quotes/207256514/delayed TW:2317 -0.99% /zigman2/quotes/205366389/delayed HNHAF -1.78% lost 0.9%, and Nanya Technology Corp. dropped 2.3%.
And in Sydney, an almost 3% drop in benchmark U.S. crude-oil futures overnight weighed on energy shares.
Woodside Petroleum Ltd. /zigman2/quotes/203437212/delayed AU:WPL -3.30% /zigman2/quotes/206770672/delayed WOPEF -11.71% lost 0.9% and Santos Ltd. /zigman2/quotes/207349564/delayed AU:STO -2.35% /zigman2/quotes/207933640/delayed STOSF -1.04% retreated 2.4%.