Asia: China paces the advance as investors cheer new cross-border investment scheme

Asian shares ended higher on Tuesday, with the Hang Seng index and Shanghai Composite up 0.9% and 2%, respectively, as investors welcomed a new cross-border investment scheme announced over the weekend.

The Hong Kong market had been closed on Monday for a holiday.

The programme announced, known as the mutual fund recognition framework, would allow funds domiciled in Hong Kong and China to be sold in each other’s market from July, in a move to facilitate cross-border investment that could result in a flood of fresh capital to Hong Kong’s market.

Jefferies said in a note that under the scheme, it is estimated that 100 Hong Kong funds and 850 Mainland funds will be qualified to participate. “We believe the launch of the MRF scheme marks another positive step forward in opening China's investment market,” it said.

One of the biggest risers was stock-exchange operator Hong Kong Exchanges & Clearing Ltd, whose shares closed up nearly 4%.

In Japan, the Nikkei 225 closed up just 0.1%, having traded at 15-year highs in recent sessions, while Australia's S&P/ASX 200 ended up 0.9% at 5,773.4.

Shares in Fortescue Metals closed nearly 11% higher following reports that Chinese companies were seeking permission to buy a stake in the mining company