Asia: Surge in Chinese stocks drives equity markets higher across the region

Asian equity markets rose on Wednesday, as Chinese stocks jumped on speculation Beijing will open a trading link between Shenzhen and Hong Kong by the end of the year.

The Shenzhen Composite Index surged 5.12%, while the Shanghai Composite Index gained 4.31% and Hong Kong’s Hang Seng Index rose 2.15%, as Chinese firms in Hong Kong rose 2.7%.

“Chinese stocks rose the most in three weeks led by financials and technology helped by the exchange link article and reports that Beijing is ready to open up its markets further to foreign investors,” said Michael Van Dulken, head of research at Accendo Markets.

On Tuesday, the People’s Bank of China published an article on its official website in which governor Zhou Xiaochuan hinted Beijing will unveil the Shenzhen-Hong Kong Stock Connect later this year.

Meanwhile, the latest Markit/Caixin Media survey showed the Caixin China services purchasing managers’ index rose from September’s 14-month low of 50.5 to 52.0 last month, indicating that the stimulus measures implemented by Beijing might be beginning to deliver results.

"This shows that previous stimulus policies have begun to take effect, while the economic structure steadily improved," said He Fan, chief economist at Caixin Insight Group.

"The economy has started to show signs of stabilising, reducing the need for a further stimulus."

Japan’s Nikkei Stock Average rose 1.30%, helped by the initial public offering for state-owned Japan Post Holdings and its financial units. Following what was the world’s biggest IPO since the debut of Alibaba in September last year, shares in Japan Post surged 15%.

However, shares in air-bag maker Takata tumbled 13.4% after the group was fined $70m by the US auto-safety regulator over a series of reporting lapses involving airbags.

Meanwhile, the latest Nikkei/Markit survey showed the purchasing managers’ index monitoring the services sector rose from 51.4 in September to 52.2 last month, the best reading since August and the second-highest since September 2014.

Elsewhere, South Korea’s Kospi rose 0.21%, while Australia’s S&P/ASX 200 edged 0.06% higher as a rally in energy stocks was offset by signs of weakness in the local economy.

On the currencies front, the yen declined 0.10% against the dollar, while the Australian dollar gained 0.07% against the greenback.