HONG KONG (MarketWatch) — Chinese and Hong Kong stocks surged on Monday as hopes that Beijing may soon relax its monetary policies to support economic growth spurred strong buying across sectors.
Many regional markets suffered modest losses, however, as doubts about the euro-zone’s efforts to contain the debt crisis prompted investor caution despite upbeat U.S. employment data on Friday.
China’s Shanghai Composite Index /zigman2/quotes/206600939/delayed CN:000001 -4.31% jumped 2.9% to 2,225.89 for its biggest percentage increase since Oct. 12, while Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -1.84% climbed 1.5% to 18,865.72.
Elsewhere, South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -0.81% declined 0.9% to 1,826.49, Australia’s S&P/ASX 200 Index /zigman2/quotes/210598100/delayed AU:XJO -0.61% slipped 0.1% to 4,105.40 and Taiwan’s Taiex gave up 0.4% to 7,093.04. Japanese markets were closed for a holiday.
Worries over India's growth
Though India was once a rising Asian giant, foreign investors are becoming increasingly bearish on the country, and India may turn out to be no match to China.
The gains in Shanghai helped a rebound in Hong Kong after a weak start, and also led to narrower losses in some of the other markets.
“It has fallen to the Shanghai Comosite to lift Asian investor’s spirits today, a fate we have not been accustomed to of late,” said Chris Weston, an institutional trader at IG Markets, in a note to clients.
The gains on Chinese and Hong Kong bourses came after Chinese Premier Wen Jiabao, over the weekend, called for efforts to boost confidence in the share market, and for rule changes to allow private-capital investment in banks and insurers. See report on Chinese premier’s remarks.
“Long term financial reforms are still in progress. But short-term easing is just around the corner. China will maximize its financial power and minimize any associated financial risks to support growth,” said Qu Hongbin, co-head of Asian economics research at HSBC Global Research.
Shares of Yanzhou Coal Mining Co. /zigman2/quotes/208182033/delayed HK:1171 -5.08% /zigman2/quotes/203784640/delayed CN:600188 -4.66% jumped 8.2% to lead several coal miners sharply up in Shanghai; among other notable gainers, Jiangxi Copper Co. /zigman2/quotes/204256025/delayed JIXAY -3.68% /zigman2/quotes/201334192/delayed CN:600362 -4.79% jumped 5.3% and Anhui Conch Cement Co. /zigman2/quotes/204422624/delayed CN:600585 -3.48% climbed 5.6%.
In Hong Kong, Yanzhou jumped 4.9%, Guangzhou R&F Properties Co. /zigman2/quotes/200033596/delayed HK:2777 -2.52% /zigman2/quotes/210465272/delayed GZUHY -4.65% added 4.9% and Haier Electronics Group Co. /zigman2/quotes/209425634/delayed HK:1169 -1.42% /zigman2/quotes/200567000/delayed HRELY -1.58% gained 6%.
The performance in the rest of Asia was less impressive. U.S. stocks ended on a lackluster note Friday, with investors looking past some upbeat U.S. employment data, after Italian bond yields rose back over the 7% mark and the euro dropped below $1.27 for the first time since September 2010. See report on U.S. stock moves Friday.
Daiwa Capital Markets strategists said that the risk of another shock from Europe in the near term is “considerable.” The strategists said some key risks included negotiations with private Greek-bond holders, upcoming elections in Greece and France, and sovereign-rating reviews by credit agencies. See column on risks surrounding French elections.
French President Nicolas Sarkozy and German Chancellor Angela Merkel were due to meet later Monday to discuss the region’s debt crisis.
“The market isn’t expecting any good news from the meeting later today,” said Peter Esho, strategist at City Index. “Expectations are so low.”
Consumer discretionary stocks lost ground in Australia after data showed that retail sales stagnated in November. Read more on retail sales.
Shares of upmarket department-store operator David Jones Ltd. lost 2.9%, while those of JB Hi-Fi Ltd. /zigman2/quotes/206014924/delayed AU:JBH -0.61% traded down 1.1%.
Several technology and financial stocks were among the decliners, with Sinopac Financial Holdings Co. /zigman2/quotes/208853894/delayed TW:2890 -0.45% losing 1.7% and Nanya Technology Corp. /zigman2/quotes/206575432/delayed TW:2408 -2.30% shedding 6.7% in Taipei.
In Seoul, Samsung Electronics Co. /zigman2/quotes/202367843/delayed SSNLF 0.00% shed 2.3% and Shinhan Financial Group Co. /zigman2/quotes/208869909/composite SHG -1.13% dropped 1.6%, while Macquarie Group Ltd. /zigman2/quotes/206727308/delayed AU:MQG -1.54% /zigman2/quotes/209628452/delayed MQBKY +0.99% declined 1.9% in Sydney.