Asian stock markets mostly advanced Wednesday with Japanese shares extending their gains after rally in the previous session on expectations that incoming Prime Minister Shinzo Abe will pursue drastic stimulus measures to boost the economy.

Japanese benchmark Nikkei gained 0.42 percent or 42.70 points to 10,122.82 and South Korea’s KOSPI Composite advanced 0.77 percent or 15.28 points to 1,997.10 while Chinese Shanghai Composite declined 0.03 percent and Hong Kong’s Hang Seng remained closed for holiday.

Japanese Nikkei surged 1.4 percent Tuesday as the yen declined to its lowest level in 20 months against dollar after Shinzo Abe put pressure on the Bank of Japan (BOJ) to adopt a 2 percent inflation target. Abe had said that he would try to revise a law guaranteeing the central bank's independence, if his demand was not met.

Shinzo Abe, who gets sworn in Wednesday as the Prime Minister after a gap of over five years, has won two-thirds of the available seats in the Japanese lower house on the back of promising a rapid economic recovery. The yen started declining since Abe’s landslide victory as he has been pressurising the BOJ for further monetary stimulus to boost the world’s third largest economy.

The BOJ recently eased the monetary policy for the third time in four months by expanding asset purchases. At its monetary policy meeting last Thursday, the BOJ expanded the asset-buying and lending program by 10 trillion yen to 101 trillion yen.

"The market is overbought, so the Nikkei may not rise sharply, but 'Abe trades' may invite some buying.  If the dollar trades above 85 yen, investors are likely to chase the Nikkei higher to near 10,200,” Hiroichi Nishi, general manager at SMBC Nikko Securities, told Reuters.

Meanwhile, minutes of the BOJ's policy-setting meeting in November showed Wednesday that some board members said that if the outlook for economic activity and prices deteriorated further or risks regarding the outlook increased substantially, it was necessary for the BOJ to take appropriate actions decisively. Some members raised the point that it might be necessary for the bank to improve its policy measures further to enhance the influence of monetary policy on foreign exchange rates.

Exporters and finance-related firms led gains in Tokyo. Sony Corp surged 2.76 percent and Sharp Corp. climbed 4.76 percent while Nomura Holdings Inc. and Daiwa Securities Group gained 2.62 percent and 2.16 percent respectively.

Chinese Shanghai slightly declined after surging 2.5 percent in the previous session.  Agricultural Bank of China Ltd. fell 1.07 percent and Industrial & Commercial Bank of China Ltd. declined 1.21 percent in Shanghai.

In Seoul, LG Display Co Ltd. gained 2.53 percent and Samsung Electronics Co Ltd. rose 1.36 percent while Hyundai Motor advanced 1.12 percent.