Asian markets ended sharply higher Monday, as concerns over the financial sector eased and crude oil prices retreated.
Regional market participants played catch-up to a rally in U.S. stocks that has seen the Dow Jones Industrial Average post its biggest three-session percentage gain since March 2003. The Dow gained 0.4% Friday, bringing its gains to 4.9% for the final three sessions of the week, and 3.6% for the week as a whole. Investors in Asia took heart after U.S. banking giant Citigroup /zigman2/quotes/207741460/composite C +0.40% reported better than expected results Friday. Financial stocks surged while energy-sensitive stocks also gained ground after light, sweet crude for August delivery settled 41 cents lower at $128.88 a barrel on the New York Mercantile Exchange last week.
While Tokyo's market was closed for a national holiday, Hong Kong's blue-chip Hang Seng Index rose 3% to 22532.90, led by gains in bank stocks.
Heavyweight HSBC /zigman2/quotes/202687335/delayed HK:5 -0.10% rose 4.1% on news reports that China's sovereign wealth fund may buy a stake in the banking giant. Local lender Hang Seng Bank /zigman2/quotes/201710108/delayed HK:11 +1.25% jumped 4.2% while Bank of East Asia /zigman2/quotes/200493903/delayed HK:23 +0.25% advanced 3%. Among Chinese lenders, Bank of Communications /zigman2/quotes/203442771/delayed HK:3328 +1.58% surged 2.7%, China Construction Bank /zigman2/quotes/208974133/delayed HK:939 +1.46% rose 2.6%, ICBC picked up 2.3% and Bank of China /zigman2/quotes/204682472/delayed HK:3988 +0.96% closed 1.8% higher.
Bargain-hunting in domestic property companies sent the Hang Seng property sub-index up 4.7% to 27452.50. Sun Hung Kai Properties /zigman2/quotes/209086152/delayed HK:16 +0.76% advanced 5.9% and Sino Land /zigman2/quotes/202960683/delayed HK:83 +0.69% jumped 6.4%. Hang Lung Properties climbed 3% higher.
Bucking the trend, Esprit /zigman2/quotes/205943307/delayed HK:330 0.00% fell 0.6% after John Poon resigned as the company's deputy chairman, group chief financial officer, executive director and company secretary effective Sunday.
Meanwhile, mainland China's benchmark Shanghai Composite Index, which tracks both Class A and Class B shares, ended up 3% at 2861.42. The Shenzhen Composite Index rose 3.4% to 852.77.
Citic Securities ended up 5.2% after the company said it expects its first-half net profit to rise by 13.3%. Banks and insurance companies were also among the biggest gainers on earnings expectations. China Merchants Bank rose 4.2% and Ping An Insurance gained 4.5%.
Property developers rose on hopes China will loosen credit controls following comments by the banking regulator over the weekend. China Banking Regulatory Commission Chairman Liu Mingkang said Sunday banks need to satisfy "normal and reasonable" demand for mortgages. Analysts said traders interpreted the comments as a sign controls on property loans will become looser. Poly Real Estate Group rose 6.7% while China Vanke gained 3.8%.
Oil refiners and air carriers extended gains after crude-oil prices declined again Friday. PetroChina rose 2.4% and Air China was 4.9% higher.
In Seoul, the Korea Composite Stock Price Index, or Kospi, gained 3.5% to end at 1562.92. Investors Monday seemed to have bet that "oil prices and the U.S. financial system might have stabilized somewhat," said Park Suk-hyun, an analyst at Eugene Investment & Securities.
Local financial stocks such as banks and brokerage firms posted notable gains. Kookmin Bank jumped 7.2% while rival Shinhan Financial Group climbed 5%. Brokerages Samsung Securities and Mirae Asset Securities soared 8.5% and 12.4% respectively.
After Friday's sharp fall, steelmaker Posco recovered and ended 3.3% higher. Hyundai Steel gained 1.3%.
LG Electronics closed 4.1% higher after the company said its second-quarter net profit jumped 84% on strong sales of handsets and flat-screen TVs, as well as hefty gains from its investment in LG Display. (See related article.)
Bellwether Samsung Electronics climbed 2.9% and Hynix Semiconductor gained 5.3%.
Elsewhere, Australia's benchmark S&P/ASX 200 Index closed up 3.5% at 5011.8 points, its highest level in a week. All sectors surged, with property trusts, industrials, financials, materials and consumer staples outperforming. The Weighted Price Index of the Taiwan Stock Exchange rose 4% to 7085.67, tracking gains throughout the region.
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