China scores massive gains in the Shanghai markets
In China, the Shanghai Composite index rose an impressive 4.8 percent to close at 2,845 today, scoring its largest gain in six months.
The market's three-day bounce owes much to positive comments by Liu Xinhua, vice chairman of the China Securities Regulatory Commission. On Wednesday, he announced that the regulator would do its best to promote a "stable and healthy" equity market.
Many investors are betting that means the Chinese government will soon take further steps to bolster the markets, signaling healthy gains to come. Liu's comments hit the front pages of both the China Securities Journal and the Shanghai Securities News, which are the nation's largest and most influential financial newspapers, pushing the index up 130 points for the day.
Top performers included Citic Securities Co., China's biggest brokerage, which leaped 6.6 percent – its largest gain since July 6, and Poly Real Estate Group Co., which surged 8.2 percent. Aluminum Corp. of China Ltd. also made the list, gaining 9.6 percent to close at 13.47.
Mining stocks soared on the news from New York of a 2.3 percent upswing in the price of gold to $978.50 per ounce. China's second largest producer, Zhongjin Gold, hit the 10 percent daily trading limit to close at 52.31 yuan, while the country's largest gold company, Zijin Mining Group Co., soared 9.2 percent to close at 8.79 yuan.
In Hong Kong, the Hang Seng index followed suit with a rise of 1.2 percent, closing the day at 19,762 – its biggest gain in nearly two weeks. Some attributed the rise to a government economist's prediction that the territory's economy may recover by the middle of 2010. On that news, Wharf Holdings Ltd., which owns two of Hong Kong's biggest malls, climbed 2.8 percent.
Hong Kong's markets were also burnished by the spike in gold prices, with the Hang Seng-listed shares of Zijin Mining Group Co. surging 8.5 percent. The shipping sector also performed well today, with China Cosco Holdings Co. Ltd., the region's largest and ever-present container carrier, cruising to a 6.5 percent gain, while the country's second largest shipping company, China Shipping Container Lines Ltd., shot up 8.2 percent. Orient Overseas International Ltd. joined its competitors, jumping 7.7 percent.
Not only cargo carriers benefited, as Shun Tak Holdings Ltd. scored a 10.7 percent gain. The company, which runs Hong Kong's network of high-speed ferries and helicopters, got a boost today from research indicating that Macau's economy is on the mend, fueling hopes of increased travel between Hong Kong and the region's gambling Mecca.
But all this good news did not spread to Japan, where the Nikkei closed down 0.64 percent to close at 10,215. Car companies stalled, with Honda sliding 2.4 percent and Toyota losing 1.8 percent. Much of this can be attributed to the currency markets: With the yen now trading at a seven-week high against the dollar, profits from sales in the U.S. shrank considerably for the Japanese automakers. Still, all in all, it was a fine day for Asia's markets.