MUMBAI (MarketWatch) — Asian stock markets broadly advanced Wednesday, as investors reacted to Chinese manufacturing data and a move to cut trading costs, while a weaker yen helped Japan’s market.
Investors returning from a one-day break in Hong Kong pushed the Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -2.75% up 1%, while the Shanghai Composite Index /zigman2/quotes/206600939/delayed CN:000001 -4.04% rose 1.8% as mainland Chinese bourses traded for the first time this week.
“China and India continue to remain our favored markets, with positive signs out of the U.S. providing export upside to China, and any pessimism around the case for India already priced in,” said Andrew Pease, Russell Investment’s chief investment strategist for Asia-Pacific.
Asian markets can push higher in 2012, he said. But the outlook is mixed given slower growth, earnings headwinds, valuations and scope for monetary policy easing. “The gains will be hard won,” Pease said.
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Among other Asian stock markets back from a holiday Wednesday South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -3.30% rose 0.9%.
Japanese and Australian markets were the only major Asian bourses open Tuesday, and Wednesday’s gains for both markets were less pronounced than elsewhere in the region. The Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -3.67% rose 0.3%, while the Australian S&P/ASX 200 index /zigman2/quotes/210598100/delayed AU:XJO -3.25% rose 0.1%.
While much of Europe was also closed for a holiday on Tuesday, the Dow Jones Industrial Average rose to hit its highest close since late 2007, a day after a report indicated U.S. manufacturing expanded in April. Read U.S. market snapshot.
“The survey will ease concerns ... of a renewed slowdown in growth similar to the one seen last year. We think the latest recovery is made of sterner stuff,” said Paul Dales, senior U.S. economist at Capital Economics.
Investors were also eyeing an uptick in manufacturing data from China. Official data out Tuesday showed the Chinese manufacturing sector steadily improving in April, rising for a fifth straight month. Read more on offical Chinese data.
On Wednesday, HSBC released its own manufacturing survey results for April, which also showed an improvement, although the index still remained in contraction territory. Read more on HSBC China data.
“The upward revision to April’s final PMI reading, compared to the [preliminary] estimate, confirms that the pace of China’s slowdown [has] stabilized,” said Hongbin Qu, HSBC’s chief economist for China.
A range of firms were advancing in Hong Kong, with China Coal Energy Co. /zigman2/quotes/201486584/delayed HK:1898 -3.44% /zigman2/quotes/200280825/delayed CN:601898 -3.36% /zigman2/quotes/205321671/delayed CCOZY -1.24% up 1.4%, and China Shenhua Energy Co. /zigman2/quotes/206065610/delayed HK:1088 -2.88% /zigman2/quotes/202621923/delayed CN:601088 -2.50% /zigman2/quotes/206839995/delayed CSUAY +0.21% rising 0.3%.
Apparel firm Esprit Holdings Ltd. /zigman2/quotes/205943307/delayed HK:330 -5.71% /zigman2/quotes/206195919/delayed ESPGY +5.26% gained 2.4%, airline Cathay Pacific Airways Ltd. /zigman2/quotes/203532437/delayed HK:293 -1.96% /zigman2/quotes/208114856/delayed CPCAY -1.84% rose 1.7%, and exporter and logistics firm Li & Fung Ltd. /zigman2/quotes/201795755/delayed HK:494 -4.48% /zigman2/quotes/201638706/delayed LFUGY +1.47% advanced 2.2%.
Also helping sentiment for Chinese stocks was news that the China Securities and Exchange Commission and the mainland stock markets would lower costs for stock transactions. Regulators also plan to tighten rules for initial public offerings and unqualified firms would be forced to delist, Citigroup analysts said.
“This is likely part of the government’s effort to lift the confidence level of investors in the [mainland Chinese] A-share markets ahead of the leadership reshuffle this fall,” they said.