Asia: Equities rally on hopes for fresh stimulus in China

Asian stocks rallied on Tuesday, as investors pinned their hopes on expectations Chinese authorities will soon introduce fresh stimulus measures.

The Shanghai Composite Index gained 0.32%, while Hong Kong’s Hang Seng Index rose 1.75%, driven higher by a 2.6% gain in the property sector, which saw China Vanke rise 7.1% in Hong Kong and Poly Real Estate Group jump 10% in Shanghai.

The gains came after fresh readings on China’s economy showed the manufacturing sector in the world’s second-largest economy slowed down in November.

Data released by the National Bureau of Statistics showed China’s manufacturing sector contracted for the fourth month in a row, falling to its lowest level in more than three years.

The official purchasing managers’ index slipped to 49.6 in November, marking its lowest level since August 2012 and falling short of expectations for a reading of 49.8.

It was a brighter picture in terms of non-manufacturing, however, with the services PMI coming in at 53.6 from 53.1 in October.

“It appears that the big Chinese spendathon did have a positive effect on the Chinese economy,” said CMC Markets’ chief market analyst Michael Hewson.

He added the figures were “more encouraging given all the positive noises coming out of China during Singles Day at the beginning of November which saw spending records broken".

Japan’s Nikkei Stock Average climbed 1.34% to 20,012.40, the first time it has closed above the 20,000 mark since 20 August.

Elsewhere, South Korea’s Kospi and Australia’s S&P/ASX 200 advanced 1.60% and 1.93% respectively.

Data released earlier on Tuesday showed the PMI monitoring manufacturing activity in South Korea remained unchanged at 49.1 in November, while Australia’s manufacturing sector expanded for the fifth consecutive month.

Meanwhile, the Reserve Bank of Australia kept rates on hold at a record low of 2%, a decision which was largely expected by economists and which sent the Australian dollar surging against its American counterpart.

The Aussie dollar gained 0.77% against the greenback, while the yen edged 0.04% higher against the US currency and the onshore Chinese yuan slid 0.03% against the dollar following the International Monetary Fund decision to include the currency in its reserve basket.