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ASIA MARKETS: China Leaders' Remarks Lift Shanghai; Asia Gains

Date : 12/05/2012 @ 4:20PM
Source : Dow Jones News
Stock : China Life Insurance CO Ltd (LFC)
Quote : 43.94  0.0 (0.00%) @ 2:10PM
China Life share price Chart

ASIA MARKETS: China Leaders' Remarks Lift Shanghai; Asia Gains

Ping An Insurance (group) Company Of China Ltd. (PC) (USOTC:PNGAY)
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By Sarah Turner, MarketWatch

HONG KONG (MarketWatch) -- Chinese stocks jumped on Wednesday, leading gains for Asia markets, as China's incoming leaders made reference to policy continuity and stability in their first official gathering since last month's leadership convention.

The Shanghai bourse rallied off a 46-month low, with the Shanghai Composite Index surging 2.9%. Shenzhen's Composite Index leapt 3.8% and Hong Kong's Hang Seng Index advanced 2.2% to end at a 16-month high.

Gains were more moderate in other markets, with Japan's Nikkei Stock Average finishing 0.4% higher, and South Korea's Kospi adding 0.7%.

Australia's S&P/ASX 200 index rose 0.4%, and Singapore's Straits Times Index was up 0.6% late.

Supportive economic policy seen

HSBC's Chinese economics team said comments from a meeting of China's new leaders Tuesday implied that supportive economic policy would remain in place in China over coming quarters.

The meeting, the first official assessment of the Chinese economy following November's leadership handover, saw leaders call for policy continuity and stability, the economists noted.

"They see the economy stabilizing and more favorable factors in the coming year. They called for policy continuity and stability, and strengthening of reform efforts in key policy areas.

"This in our view implies that accommodative policy as well as property tightening measures will remain in place in the coming quarters. In addition, fiscal and urbanization reforms are set to be stepped up," the economists said.

The leaders also indicated confidence about meeting 2012 economic and social development goals.

The news helped drive China stocks higher, although other analysts said there was little in the statements that could be seen as adding a major boost to markets.

Meanwhile, Kevin Lai, an economist at Daiwai in Hong Kong, said: "Sentiment has improved as many have been talking about a Chinese recovery. [But] the broad picture hasn't really changed; growth continues to be quite soft elsewhere ... we recently downgraded our forecasts in Europe, Japan and the U.S."

Linus Yip, strategist at First Shanghai Securities, said: "I don't see any sparkling news, but we all know the Shanghai index is already at four-year lows amid a lack of market confidence, so I think it's a technical rebound."

News out late Tuesday of the Hong Kong Monetary Authority's latest market intervention to curb the strength of the Hong Kong dollar also likely helped confidence in Hong Kong, he said, as "it's a signal that funds are coming into the market."

Movers

Amid the broad-based gains for Chinese shares, insurance companies outperformed, with Ping An Insurance Group Co. (PNGAY) rising 5.1% in Hong Kong after HSBC Holdings PLC (HBC) agreed to sell its stake in the insurer.

Ping An's Shanghai shares , jumped 4.2%, with rival China Life Insurance Co.'s (LFC) Shanghai-listed shares added 2.9%.

"Banks and insurance stocks are doing well as they are big-cap stocks and tend to move with the market," said First Shanghai Securities' Yip.

Banks gaining ground in Hong Kong included HSBC, up 1.7%, while China Merchants Bank Co. (600036.SH) rose 2.6%, and Bank of East Asia Ltd. (BKEAF) climbed 2.2% after a Nikkei report that it's planning a share sale to Japan's Sumitomo Mitsui Banking Corp.

Mainland Chinese property developers also stood out in Hong Kong, with China Resources Land Ltd. (CRBJF), up 2.5%, while Hong Kong's Wharf Holdings Ltd. (WARFF) gained 4.3%.

On the Chinese mainland, real-estate major China Vanke Co. rose 2.1% in Shenzhen after its November sales doubled in November to 17.13 billion yuan ($2.75 billion) compared to a year ago.

Vanke rival Gemdale Corp. advanced 4.1% in Shanghai.

In other China action, shares of heavy equipment makers Zoomlion Heavy Industry and Sany Heavy Industry jumped 6% and 10% respectively as the meeting by China's new leaders was seen as giving a boost to urban construction projects.

Tokyo

Over in Tokyo, Fast Retailing Co. (FRCOY) advanced 3% after the market heavyweight reported late Tuesday that November same-store sales in Japan for its Uniqlo casual clothing chain rose 13.7%.

Consumer-electronics firm Sharp Corp. (SHCAF) jumped 4% after it announced an investment of up to $120 million from Qualcomm Inc.

However, losses for some tech and industrial firms worked to curb upside for the Japanese market. Fujitsu Ltd. (FJTSY) gave up 1.9%, and Renesas Electronics Corp. (RNECY) retreated 1.4%.

(QCOM)Technology firms saw some gains in Korea, however, with heavyweight Samsung Electronics Co. (SSNLF) up 1.8%, SK Hynix Inc. (HXSCL) ahead by 1.6%, and LG Display Co. gaining 2.3%.

Banks moved higher in Australia after Tuesday's interest rate cut, with Commonwealth Bank of Australia (CBAUY) up 1% and Westpac Banking Corp. (WBK) rising 0.6%.

National Australia Bank Ltd. (NAUBF) improved by 0.3% after it said it would pass on 20 basis points of the Reserve Bank of Australia's 25 basis point cut made Tuesday to its customers, the first of the major banks to do so.

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