Asia stocks mostly gain, with China in lead

By Sarah Turner, MarketWatch

SYDNEY (MarketWatch) — Hong Kong and Shanghai stocks rose to outpace gains for other Asia markets Monday, with financials among the top-gaining sectors.

The Shanghai Composite Index CN:000001 +3.06%  jumped 2.6%, while Hong Kong’s Hang Seng Index HK:HSI +0.64%  climbed 0.6%.

Australia’s S&P/ASX 200 index AU:XJO +0.22%  edged up 0.2% and South Korea’s Kospi KR:SEU +0.52% ,rose 0.5%, while on the downside, Singapore’s Straits Times Index SG:STI -0.53%  fell 0.4%.

Japanese markets were closed Monday for Coming of Age day, though Nikkei Stock Average futures traded 1.6% higher in Singapore as the Japanese yen lost more ground against major rivals. 

Ben Kwong, chief operating officer at KGI Asia, said that other Asia markets were also feeling the effect of yen weakness. Japan is a source of cheap money, he said, ensuring that “liquidity-driven trade continues.”

In that environment, “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, giving brokers and insurers as examples.

China may increase the quota for foreign investors to invest in its domestic equity market, according to China’s securities regulator chief, according to reports.

Among Shanghai-listed financials, Citic Securities Co. CN:600030 +6.92% surged 6.1%, Bank of China Ltd. CN:601988 +1.71% BACHY -0.51% gained 1.7%, China Construction Bank Corp. CN:601939 +2.59% CICHF -2.96%  rose 1.9%, and China Merchants Bank Co. CN:600036 +4.22%   CIHHF -1.29%  traded 3.7% higher.

Great Wall Motor Co. CN:601633 +6.18%  climbed 5.4% in Shanghai 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. Read: Great Wall shares jump on upbeat guidance report.

Financials were also outperformers in Hong Kong trade, where HSBC Holdings PLC UK:HSBA -0.13% HBC +0.28%  rose 1%, Bank of China HK:3988 +1.37%  added 1.4%, and broker China Everbright Ltd. HK:165 +7.16%   CEVIF +13.37%  gained 4.8%.

Insurers were also supporting the Hong Kong index with AIA Group Ltd. HK:1299 +1.00%   AAGIY -0.70%  up 1.2% and Ping An Insurance Group Co. HK:2318 +2.91%   PNGAY -2.54%  gaining 2.4%, while China Life Insurance Co. HK:2628 +2.88%   LFC -2.57%  climbed 3.5%.

On the downside in Hong Kong, logistics giant Li & Fung Ltd. HK:494 -15.42%   LFUGY -14.21%  plunged 15.1% after warning core operating profit for the past year could tumble as much as 40%.

South Korean trading saw LG Chem Ltd. KR:051910 -1.70% LGCLF -39.13%  fall 1.7% and Kia Motors Corp. KR:000270 -0.37% KIMTF -1.81%  lost 0.4%, offsetting a 1.5% advance for Hyundai Motor Co. KR:005380 +1.46%   HYMTF -4.69%  and a 1.2% gain for Samsung Electronics Co. KR:005930 +1.24% SSNLF 0.00%

The Australian market saw some buying for real-estate firms, with Mirvac Group AU:MGR +1.29% MRVGF +12.66% up 1.3%, Stockland Australia AU:SGP +1.44%   STKAF +1.23% adding 1.4%, and Fkp Property Group AU:FKP +3.15% FRKPF 0.00% , up 3.2%.

The Asia moves came after U.S. stocks ended Friday’s session little changed, with investors pausing after pushing the S&P 500 index SPX -0.0048%  to a five-year high earlier in the week. Read: Huge stock fund flows have Wall Street abuzz.

Wells Fargo & Co. WFC -0.85%  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. Read: This week could make or break financials’ rally.

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.

Sarah Turner is MarketWatch's bureau chief in Sydney. Follow her on Twitter @SarahTurnerMKTW.