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 /zigman2/quotes/210598127/delayed CN:SHCOMP +0.43% added 2.4%, its biggest percentage gain in more than a month, and Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +1.07% 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.
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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) /zigman2/quotes/210561991/realtime/sampled USDCNY 0.0000% worth of local-currency loans in July, beating expectations.
Construction-related stocks soared on Chinese markets. Shares of Anhui Conch Cement Co. /zigman2/quotes/204422624/delayed CN:600585 +0.79% jumped 4.6%, and property developer Gemdale Corp. /zigman2/quotes/208026094/delayed CN:600383 -0.25% rose 4.4% in Shanghai.
In Hong Kong, Anhui Conch /zigman2/quotes/204025278/delayed HK:914 +2.77% advanced 4%, Aluminum Corp. of China Ltd. /zigman2/quotes/202960704/delayed HK:2600 +2.10% /zigman2/quotes/208051344/composite ACH +2.90% jumped 6%, and China Resources Land Ltd. /zigman2/quotes/202417326/delayed HK:1109 +0.14% /zigman2/quotes/201656413/delayed CRBJF -2.03% gained 2.3%.
The strong advance also helped prop up some other regional markets, with Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO +0.36% finishing 1.1% higher, and South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +1.02% adding 0.2%.
However, Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK +0.23% 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.
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Financial shares declined in Tokyo, with Daiwa Securities Group Inc. /zigman2/quotes/201391978/delayed JP:8601 +0.92% /zigman2/quotes/206649614/delayed DSECF +4.67% losing 2.3%, Nomura Holdings Inc. /zigman2/quotes/206251373/delayed JP:8604 +1.59% /zigman2/quotes/201003564/delayed NRSCF +14.76% sliding 3.1%, and Mizuho Financial Group Inc. /zigman2/quotes/204507985/delayed JP:8411 +0.29% /zigman2/quotes/200950467/composite MFG 0.00% shedding 1.4%.
Bridgestone Corp. /zigman2/quotes/205589013/delayed JP:5108 -1.63% /zigman2/quotes/204111038/delayed BRDCY +0.77% gained 2.8% after the tire maker raised its profit forecast for the fiscal year ending next March, while Citizen Holdings Co. /zigman2/quotes/202792467/delayed JP:7762 +1.00% 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. /zigman2/quotes/201448516/delayed AU:BHP -0.13% /zigman2/quotes/208108397/composite BHP +1.31% gained 2.4% and Rio Tinto Ltd. /zigman2/quotes/200083756/delayed AU:RIO 0.00% /zigman2/quotes/202627887/composite RIO +1.39% 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. /zigman2/quotes/203840223/delayed AU:NCM +0.96% /zigman2/quotes/206026738/delayed NCMGF +0.05% 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.