Asia: Markets higher on Fed's dovish minutes

Hong Kong's Hang Seng returned to its recovery path after a day's pause, rising 1.17% after protests became further becalmed and traders were heartened by minutes from the US Federal Reserve.

The Shaghai Composite index was up 0.14% but the Nikkei finished down 0.76% as the dollar slid against the yen.

Beijing has pledged further measures to lower financing costs. China's Premier Li Keqiang revealed plans to launch major investment projects in information networks, water conservancy and environmental protection this year.

Fiscal and monetary policies would be kept flexible and appropriate "targeted" adjustments made when needed to support the real economy, Li said at a meeting with cabinet officials, according to the South China Morning Post.

Investors may sell Chinese junk-rated bonds to make room in their portfolios for additional Tier-1 bank capital securities from the world’s second-largest economy, according to a survey of money managers by Morgan Stanley cited by Bloomberg.

Bank of China is to begin marketing its first issue of additional Tier-1 preferred shares this week as it looks to raise as much as $6.5bn

Meetings with investors are due finish on 14 October and the sale could come as early as next week, sources said.

Asia is now a "sweet spot" for bonds, according to Bank of America Merrill Lynch, as increased concerns on the global growth outlook has seen the fixed-income securities perform well.

"With Asia rates unable to sell off despite the bounce in US rates into Sept FOMC, it is perhaps unsurprising they rally further as US rates dropped back recently as global growth concerns increased. The combination of controlled inflation outlook and generally solid fiscal and external balances means Asia bonds could be a potential safe haven within emerging markets."

Advising clients how to position, Merrill analyst Albert Leung expressed a preference for long Thailand and India bonds "as both countries should benefit from the recent decline in oil prices".

"In Thailand’s case, the curve remains steep and for India the structurally lower inflation story should eventually lead to an RBI cut."

On the other hand, he is more cautious on Korea and Malaysia as rates "have limited downside from here" due to the combination of high country credit ratings and strong external and fiscal balances allowing Asia rates to trade as potential safe havens.