Asia report: China gains amid mixed Monday

The Shanghai Composite closed up 0.81% to 2,897.34, led by gains in basic materials. The smaller, technology-heavy Shenzhen Composite was up 2.03% to 1,741.65.

Those gains came after the National People's Congress - China's annual legislative session - opened on Saturday.
Investors appeared to focus on the messages of economic growth, rather than the politburo's plans for record mass layoffs in a bid to cut production in the oversupplied steel and coal industries.

During the meeting, officials set growth goals for the year to the 6.5%-7% range, lower than the target set in 2015 of 'around 7%'.

Expectations of increased government spending on public projects helped fuel the shares of industrial goods producers - known colloquially as the old economy - in both China and Hong Kong as well.

Shares in Hainan Mining Company jumped 10.05%, hitting the daily movement limit. China Railway Construction Corporation lifted 1.01%, and Maanshan Iron & Steel managed a 3.77% increase.

At the same time, Beijing was said to be trying to support the so-called new economy - firms catering to the middle class - as it tried to guide the economy from one led by investment, to one led by consumption. New economy companies included those in the technology, clean energy and pharmaceutical sectors.

Shares in online game developer Beijing Kunlun Tech Company - one such new economy stock - also hit the daily limit, leaping 10%.

"To counterbalance overcapacity and the old economy, China will put more emphasis on innovation-driven development," said Francois Perrin, East Capital Asia fund manager and head of greater China markets.

Authorities also guided renminbi stronger on Monday morning against the US dollar for a third straight day, though it was trading slightly weaker in the offshore market where it floats freely. It was last 0.13% off the greenback, at CNY 6.5166.

Elsewhere, the Hang Seng Index was down 0.08% by end of play, the Kospi was up 0.11% and the Nikkei Stock Average was off by 0.61%.

The decline in Japan was led by losses in insurance and utilities stocks, after Bank of Japan governor Haruhiko Kuroda downplayed the chance of more stimulus actions ahead of a policy meeting set for later this week.

Down under, a rally in iron ore prices led the S&P/ASX 200 1% higher to 5,142.8. The Australian market was now trading at levels not seen since 6 January.

Those gains in Sydney were led by miners such as Fortescue Metals - a pure play iron ore firm - up 23.7%, and BHP Billiton, up 5% on the local bourse. Rio Tinto gained 3.5% in Sydney.

There was some concern locally by the rate of the rally, with iron ore prices rising 7.5% since 1 March, but BHP stocks gaining 19.1%.

"Our view is that it's a relief rally, the price action is consistent with what you'd expect to see in a downward trend," said Katana Asset Management portfolio manager Romano Sala Tenna.

New Zealand investors rallied to see the local market close at an all-time high for the third trading day in a row, with the S&P/NZX 50 finishing up 0.01% to 6,418.93. Local fuel distributor Z Energy led the risers, up 3.1%.

Local analysts said that was likely a correction based on recent oil price movements. Brent crude was last up 1.65% to $39.37, while West Texas Intermediate gained 1.75% to sit at $36.56 per barrel.

In currencies, the yen moved closer to the dollar, and was last 0.12% stronger to JPY 113.60. The Aussie shifted back 0.44% to sit at AUD 1.3500 per USD, and the Kiwi stumbled by 0.88% to NZD 1.4797.

UPDATE: China's official foreign exchange reserves decreased by $28.6bn month-on-month to reach $3.2trn in February, according to data from the People's Bank of China released after the close of stockmarket trading in Shanghai. Read more