Asia: China rises on stimulus hope, Japan aided by yen fall

Asian stocks were mixed on Monday with Hang Seng closing on the red side following poor Chinese data, but Japanese stocks were higher thanks to a dollar boosted by Friday's strong non-farm payrolls.

After starting the week in the red, Shanghai's main index closed higher at 0.62% on hopes for further stimulus in Beijing.

Data released over the weekend showed the highest Chinese trade surplus on record at $60bn, better than expectations of $48bn.

The increase in trade balance was helped by a significant drop in imports to -19.9% from -2.4% the month before. Forecasts expected a decrease of 3.2%.

Exports also dropped by 3.3%, against forecasts of an increase of 5.8%. This was due to subdued foreign demand and rising costs.

The country's Ministry of Commerce & Trade said on Friday ahead of the trade outlook results that China will aim to stabilise its imports of raw materials, while simultaneously aim to boost purchases of high-tech items and consumer goods.

N+1 Singer analysts said the data "led to some investment banks suggesting that China may relax its controls on the yuan's movements against the US dollar to adjust for imported disinflation".

However, Hong Kong's Hang Seng fell 0.64% due to the weak underlying demand noted in the Chinese data and amid ongoing concerns about Greece.

In a more positive data, a stronger dollar and weaker yen helped Japanese stocks to rise 0.37%. The yen was at ¥118.49 at 12:10 GMT from ¥119.14 on Friday.

Deutsche Bank's Jim Reid also cited better Japanese trade data and comments from the Bank of Japan that the "virtuous cycle is working in the economy", and although consumer confidence improved, it missed consensus expectations while business sentiment was mixed.

BoJ board member Yoshihisa Morimoto said the country will not slip back into deflation and there is no need of an immediate stimulus extension.

"Crude oil prices have fallen further but when you look at other factors, the broad trend hasn't changed," he said in a press conference.

"For the BoJ to have a smooth exit from its easing measures, it's important for there to be trust in fiscal reforms."

"What's important is to achieve a cycle under which prices rise gradually accompanied by improvements in the economy," he continued.

Furthermore, Japanese trade balance dropped in December to -¥395.6bn from -¥636.8bn the month before, but it was better than forecasts of -¥472bn.