Asia: Chinese stock rally drives benchmarks higher across the region

Asian stocks closed mostly higher on Wednesday, driven higher by a rally in Chinese stocks.

The Shanghai Composite Index surged 4.89%, registering its largest daily gain in percentage terms since 27 August, as investors were buoyed by reports suggesting securities firms might not have to close down accounts belonging to trust funds.

Hong Kong’s Hang Seng rose 2.38%, meaning the benchmark has now gained 6.7% since plunging to the lowest level since July 2013 on 7 September.

Chinese authorities have been clamping down on illegal margin trading accounts and expect to close approximately 2,000 accounts with a combined market capitalisation of around $29.5bn.

However, according to widely-followed Chinese news portal Sina.com, brokerage GF Securities sent a notice to trust firm Zhongrong International Trust saying the group would still be allowed to trade on its platform.

The report quelled fears that brokerages were stepping up their quest to clear out illegal margin trading accounts.

Investors in Asia will now shift their attention on the Federal Reserve’s two-day meeting, which kicks off on Wednesday and could result in the first hike in interest rates for almost a decade.

“China and the week’s FOMC meeting remain the focus for the markets, so a sign of improvement in the former, however artificial, and dove-boosting data for the latter has caused investors to have a much more positive outlook this Wednesday morning,” said Spreadex’s financial analyst Connor Campbell.

In Japan, the Nikkei Stock Average closed up 0.81% as it continued to recover from the seven-month low it reached on 8 September, while the yen edged 0.046% higher against the dollar.

Elsewhere, Australia’s S&P/ASX 200 rose 1.6%, also rebounding after hitting its lowest level in almost two years on 24 August, while the Australian dollar rose 0.238% against the dollar, nearing its highest level in almost two weeks.

South Korea’s Kospi climbed 1.96%, having also hit a two-year low on 24 August.