China's benchmark index surged more than 7% Wednesday as speculation the government may be considering a fiscal stimulus package helped shares reverse early declines and improved sentiment throughout the region.
The Shanghai Composite Index, which tracks both Class A and Class B shares, jumped 7.63% to close at 2484.94. It had briefly gone as high as 2498.27. The Shenzhen Composite Index rose 7.2% to 712.82.
The gains came after local media quoted Chinese Vice Premier Li Keqiang as saying the government aims to increase domestic consumption urgently to meet challenges posed by changes in the global economic situation. J.P. Morgan economist Frank Gong also said in a note Tuesday that China may be considering a stimulus package of at least 200 billion to 400 billion yuan ($29.2 billion to $58.32 billion), which would include tax cuts and measures to stabilize the capital markets and support the housing market.
Among active stocks, Citic Securities hit the 10% upside limit. Other financial firms also rose, with China Life Insurance surging 9.3%. Real-estate firm Poly Real Estate Group rose 9.4% and China Vanke gained 8.4%.
Power companies added to gains after the government raised electricity prices for the second time in two months late Tuesday. Datang Huayin Electric Power rose the 10% daily limit while Shanghai Electric Power added 7.5%. (See related article.)
The rally in mainland China aided sentiment in Asia more broadly, helping markets in Hong Kong, South Korea and Japan come off early lows or turn higher despite an overnight decline on Wall Street.
In Tokyo, the Nikkei 225 Stock Average pared loss to close down 0.1% at 12851.69. Losses in exporters offset early gains in the mining sector prompted by overnight rises in metal prices. Electronics and car makers were Wednesday's notable decliners on ongoing worries over the health of the U.S. economy. Canon /zigman2/quotes/207639533/delayed JP:7751 +1.94% fell 1.9% and Toyota Motor /zigman2/quotes/203803129/delayed JP:7203 +1.02% dropped 1.8%.
A rebound in oil prices pushed up commodity-related issues, with major natural resource developer Inpex Holdings /zigman2/quotes/206689846/delayed JP:1605 +2.31% rising 2.53% while trading house Mitsubishi gained 2.85%. Among mining companies, Toho Zinc /zigman2/quotes/205428959/delayed JP:5707 -7.96% rose 3.6% and Sumitomo Metal Mining /zigman2/quotes/205273301/delayed JP:5713 -2.38% gained 4.3%.
Hong Kong's Hang Seng Index rose 2.2% to 20931.26, recovering nearly half of the losses accumulated over the previous three trading days.
China-related financial companies led the day's blue-chip gains, with Ping An Insurance /zigman2/quotes/210315058/delayed HK:2318 +2.53% jumping 8% while Bank of Communications /zigman2/quotes/203442771/delayed HK:3328 +1.39% rose 4.3%. China Life /zigman2/quotes/202359856/delayed HK:2628 +3.11% advanced 4.3%, China Construction Bank /zigman2/quotes/208974133/delayed HK:939 +1.80% added 3.6% and Industrial & Commercial Bank of China /zigman2/quotes/201401473/delayed HK:1398 +0.81% picked up 3%.
In Seoul, the Korea Composite Stock Price Index, or Kospi, trimmed early losses to end flat at 1540.71, buoyed by solid gains in defensive stocks.
"The strong rebound of the Chinese markets also helped investor sentiment improve somewhat during the session," said Choi Seong-Lak at SK Securities.
Gains in blue-chip defensive telecommunication and utilities stocks helped the main index recoup early losses. SK Telecom rose 1.3%, Korea Electric Power gained 1.1%, and tobacco company KT&G climbed 1.6%.
Steelmakers also rebounded, with Posco rising 1.1% while Hyundai Steel gained 0.7%. Large capitalized builders ended higher on expectations that the South Korean government will reveal measures to boost the local construction market. Hyundai Engineering & Construction rose 1.1% and Daelim Industrial climbed 1.2%.
But technology stocks remained in the red for the fifth consecutive day on continued fears of a downturn in global demand. Bellwether Samsung Electronics ended down 0.7% while LG Display fell 1.2%. Hynix Semiconductor ended off 1.3%, partly due to investor concerns that its plan to sell 500 billion won ($477 million) of convertible bonds in the domestic market may create a share overhang.
Elsewhere, gains in China and a jump in commodity prices lifted the Australia's benchmark S&P/ASX 200 1.3% to 4929.5.
Materials and energy stocks accounted for most of the rise after commodity prices rose on U.S. dollar weakness. In offshore trading Tuesday, London Metals Exchange copper rose 3.1%, zinc rose 5.1% and nickel rose 7.4%, while Nymex crude rose $1.66 to $114.53 and spot gold rose $27.75 to $814.3. BHP Billiton /zigman2/quotes/201448516/delayed AU:BHP -1.55% rose 4.7% in Australia Wednesday, while Rio Tinto /zigman2/quotes/200083756/delayed AU:RIO -2.01% gained 4.8% and Oz Minerals /zigman2/quotes/208047353/delayed AU:OZL -1.33% added 5.8%.
In currencies, the dollar bought ¥110.10 Wednesday afternoon, compared with ¥109.66 late Tuesday. The euro was trading at $1.4742, down from $1.4791.
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