By Sarah Turner and V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) -- Mainland Chinese shares surged Monday
to lead Asian equities by a wide margin after a regulator said the
country will grant foreigners greater access to its stock markets,
with financials fronting the rally.
The Shanghai Composite Index jumped 3.1% to end the day at
2,311.74, its highest finish since June 18, while the Shenzhen
Composite Index surged 3.6% to 918.33. The advance more than
recovered the losses they suffered Friday, when investors locked in
profits.
Elsewhere, Hong Kong's Hang Seng Index climbed 0.6%, South
Korea's Kospi rose 0.5%, Australia's S&P/ASX 200 index gained
0.2% and Taiwan's Taiex inched up 0.1%.
The rally in China followed comments after Guo Shuqing, chairman
of the China Securities Regulatory Commission, reportedly said the
country could substantially increase the amount foreigners are
allowed to invest in local equity markets.
Reports of strong recent inflows into global equity markets and
hopes that strong liquidity would further push up stocks also aided
the broad advances.
Japanese markets were closed Monday for Coming of Age day, but
the yen lost more ground against major rivals, extending its steep
recent losses on hopes for further monetary easing.
Ben Kwong, chief operating officer at KGI Asia, said other Asia
markets were also feeling the effect of yen weakness in the form of
additional liquidity, given that Japan was a source of cheap
money.
"Investors are looking for excuses to buy rather than sell," he
said, and are focusing on an economic recovery in China and the
subsequent better performance of mainland Chinese yuan-denominated
stocks, known as A-shares. "A-shares are up, and companies involved
in A-shares benefit from that," Kwong said, citing the example of
brokerages and insurers.
In Monday's trade on mainland bourses, Sinolink Securities Co.
in Shanghai and Ping An Bank Co. in Shenzhen jumped by the day's
10% limit.
Among other notable gainers, Citic Securities Co. rose 6.9% and
Haitong Securities Co. advanced 7% in Shanghai, while Hong Yuan
Securities Co. and Guoyuan Securities Co. added 6.2% and 5.5%,
respectively, in Shenzhen.
Also contributing to the rally, Shanghai-listed shares of Great
Wall Motor Co. (2333.HK) climbed 6.2% after a Xinhua news report
Saturday cited a company spokesman as saying the vehicle maker was
targeting sales of 700,000 units this year, up from 620,000 units
in 2012. In Hong Kong, the stock added 5.1%.
Financials also outperformed in Hong Kong, where BOC Hong Kong
Holdings Ltd. (BHKLY) rose 3.2% and Ping An Insurance Group Co.
(PNGAY) gained 2.9%.
Missing out the rally, logistics giant Li & Fung Ltd.
(LFUGY) plunged 15.4% after warning core operating profit for the
past year could tumble as much as 40%.
The gains in broader Asia came after Wells Fargo & Co. (WFC)
kicked off the fourth-quarter reporting season for major U.S. banks
Friday, posting revenue and earnings that topped analyst
expectations, but with lower net interest income.
Crédit Agricole's Hong Kong-based strategists said that earnings
out this week, especially from the financial sector, would help
dictate the direction of global stock-market action and appetite
for risk-taking over the coming days.
"Hope and faith in global economic recovery, helped by data
releases in the U.S. and China in particular, have helped to calm
markets, while there is little angst as yet about the looming
debt-ceiling/spending-cut negotiations in the U.S." they said.
In Seoul, meanwhile, Hyundai Motor Co. (HYMTF) advanced 1.5% and
heavyweight Samsung Electronics Co. (SSNLF) added 1.2% to lead
broad market gains.
In Sydney, real-estate firms saw some buying, with Mirvac Group
(MRVGF) up 1.3%, Stockland Australia (STKAF) adding 1.4% and Fkp
Property Group (FRKPF) 3.2% higher.
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