Hong Kong leads gains for most of Asia
MUMBAI (MarketWatch) -- Asian stocks recovered from lackluster early Wednesday action to finish mostly higher, with Hong Kong leading the region amid some buying by funds, though volume remained light ahead of a key European summit.
Hong Kong's Hang Seng Index (HSI) rallied 1% after spending time in negative territory. The Shanghai Composite index (000001) still fell 0.2%.
Japan's Nikkei Stock Average (100000018) rose 0.8%, while Australia's S&P/ASX 200 index (XJO) gained 0.5%.
South Korea's Kospi (SEU) bucked the trend with a fractional loss, as a possible strike weighed on auto stocks.
DBS Vickers director Peter Lai said buying by funds was helping the Hong Kong market, with some investors trying to pick up stocks cheaply ahead of Chinese economic data due out in the weeks ahead.
"More people realize that a soft landing [for China] is possible, and so they're waiting for the data to come out for June," said Lai, who expects recent policy easing by Beijing to result in better economic data.
"I'm bullish on the market, as [stocks] have oversold lately," Lai said of Hong Kong shares.
Property firms managed to gain in Hong Kong, with
HSBC's chief China economist, Qu Hongbin, said that Beijing's latest fiscal tweaks "are beginning to have an impact" on the Chinese economy, demonstrated by a surprise rebound of new lending in May and improved industrial production and investment growth.
Consumer plays also did well in Hong Kong, as shares of
Japanese retailers were also among regional gainers, with spending expected to pick up as consumers and businesses move their purchases forward to beat a hike in the sales tax, which the parliament passed Tuesday. Read more on expected demand rise ahead of Japan tax hike.
Media firms lifted the Australian index, with
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Elsewhere in the sector,
Among Asia's notable decliners Wednesday, Seoul-traded shares of
Europe still weighs
The moves in Asia came after U.S. shares ended Tuesday's session with small gains, helped by upbeat data on the housing market. Read more on U.S. stocks
But Europe's ongoing debt troubles kept optimism in check, as "investors remained cautious that this week's European Union summit will mark a major turning point in the euro-zone crisis," according to John Higgins, economist at Capital Economics.
Adding to this week's raft of European developments, Egan-Jones Ratings lowered Germany's sovereign rating from AA- to A+ and issued a negative watch on the rating on expectations the country will be left with significant uncollectable receivables due to its exposure to the euro zone.
The ratings agency said that Chancellor Angela Merkel is fighting a losing battle in resisting calls for EU bonds and pushing for fiscal controls until euro-area countries agree to broad oversight of their budgets
Tuesday also saw the release of a document outlining a path to tighter fiscal integration across the euro zone and a European banking union. Read more on EU fiscal union plan
Andrew Sullivan at Piper Jaffray said in Hong Kong that "concerns remain over the European summit," and "locally volumes [are] still light."
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