SYDNEY (MarketWatch) — Mainland Chinese stocks surged Wednesday, leading Asian markets by a big margin even as the Cyprus parliament’s rejection of a European bailout plan fueled some uncertainty elsewhere.
The Shanghai Composite index /zigman2/quotes/206600939/delayed CN:000001 -3.09% jumped 2.7% to 2,317.37 and Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -1.98% climbed 1%, as investors snapped up beaten-down banks and property developers in both markets.
But markets elsewhere retreated, after the Cypriot parliament rejected a proposed financial bailout plan, forcing the government and its creditors back to the negotiating table.
Cyprus parliament rejects bank deposit tax
Lawmakers in Cyprus voted against a bank-deposit levy, part of a bill required to secure an international bailout and avoid default.
“The upshot of this rejection is that the European Union and the International Monetary Fund will need to quickly come up with a more appealing bailout package to avert the impending Cypriot default,” said William Leys, sales trader at CMC Markets.
“Until this happens uncertainty will continue, contagion fears will linger, and markets will likely remain under pressure,” said Leys.
South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -1.03% declining 1%, Australia’s S&P/ASX 200 index /zigman2/quotes/210598100/delayed AU:XJO -0.59% losing 0.4% and Taiwan’s Taiex shedding 0.5%.
Japanese markets were closed Wednesday for a holiday.
Iron ore-exposed miners were particularly weak in Australia on a subdued outlook for the mineral, used as an input material for steel.
Rio Tinto Ltd. /zigman2/quotes/200083756/delayed AU:RIO -0.75% /zigman2/quotes/202627887/composite RIO -0.58% dropped 2%, BHP Billiton Ltd. /zigman2/quotes/201448516/delayed AU:BHP -0.66% /zigman2/quotes/208108397/composite BHP -1.19% fell 2.7% and Fortescue Metals Group Ltd. /zigman2/quotes/202351558/delayed AU:FMG -0.30% /zigman2/quotes/204116626/composite FSUMF +1.21% declined 2.3%.
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Losses in South Korea were spread across sectors, with banks and some exporters hit. Mirae Asset Securities Co. tumbled 5.1% and Woori Finance Holdings Co. /zigman2/quotes/203604265/composite WF -2.59% 2.8% lower, while heavyweight Samsung Electronics Co. /zigman2/quotes/202367843/composite SSNLF 0.00% /zigman2/quotes/209800866/delayed KR:005930 -0.38% lost 1%.
Banks and property firms helped the rebound in Hong Kong as buyers circled back into those stocks after losses suffered earlier in the week.
“With share prices of the H-share banks down 5-12% in the past month, the current risk-reward seems more favorable, provided that China’s GDP growth continues to accelerate,” said Deutsche Bank’s banking analyst Tracy Yu. H share refers to shares of mainland Chinese companies listed on the Hong Kong stock exchange.
“We believe the new policy focus on cost control might help improve efficiency and profitability,” she said, while raising fiscal-year net profit estimates for the sector by 4%.
Bank of Communications Co. /zigman2/quotes/203442771/delayed HK:3328 -1.88% /zigman2/quotes/202128064/composite BCMXY +1.85% /zigman2/quotes/207155262/delayed CN:601328 -2.15% climbed 3.3% and China Construction Bank Corp. /zigman2/quotes/208974133/delayed HK:939 -2.15% /zigman2/quotes/207732534/composite CICHY -2.27% /zigman2/quotes/208058581/delayed CN:601939 -3.50% rose 2.6%; in Shanghai, the stocks jumped 4.1% and 2.6%, respectively.
Chinese property developers also attracted buying, with China Vanke Co. rising 2.5% in Shenzhen, Poly Real Estate Group Co. /zigman2/quotes/201864015/delayed CN:600048 -3.53% advancing 4.2% in Shanghai and China Overseas Land & Investment Ltd. /zigman2/quotes/202573805/composite CAOVY -2.58% /zigman2/quotes/205731176/delayed HK:688 -0.98% adding 2.9% in Hong Kong.