Asian Stock Markets Gain On China Stimulus Hopes

on July 16 2012 4:28 AM

Asian stock markets mostly advanced Monday on speculation of further stimulus measures from China after Premier Wen Jiabao warned Sunday that the recovery in the world’s second largest economy was not stable.

Hong Kong's Hang Seng gained 0.15 percent or 28.71 points to 19,121.34. The South Korean KOSPI advanced 0.27 percent or 4.90 points to 1817.79 and the Indian benchmark BSE Sensex was trading flat, and Japanese Nikkei is closed for holiday.

“Weekend comments from PM Wen and Vice-PM Li suggested concern about the stage of recovery and plans to do more to fine-tune policies and stimulate growth. A key meeting on Wednesday to review policies may result in announcement of fresh measures, and hopes for that are likely to boost sentiment,” said a note from Credit Agricole.

Markets opened on a positive note Monday, tracking positive cues from the rally on Wall Street Friday. The U.S. stock markets rallied after J.P. Morgan Chase and Wells Fargo reported a better-than-expected quarterly earnings and boosted enthusiasm about the earnings season. Sentiment went up after China reported second quarter GDP data in line with expectations, easing concerns over a sharper slowdown in the world's second-largest economy.

Asian markets are expected to be traded in ranges this week in the absence of any major impetus for direction and a light calendar for economic news. But financial developments in the euro zone and U.S. economic data will continue to weigh on the markets. Chinese shares tumbled as a slew of corporate profit warnings and comments from Wen weighed heavily on the sentiment. The Chinese Shanghai composite plunged 1.74 percent or 37.94 points to 2147.96.

The shares of ZTE slumped 15.52 percent in Hong Kong and 9.98 percent in Shanghai after the company warned that the first-half profit could slide as much as 80 percent and on news that FBI has opened a criminal investigation into ZTE over the sale of banned U.S. computer equipment to Iran, and its alleged attempts to cover it up and thwart a Department of Commerce probe, Reuters reported.

Among the other stocks, Aluminum Corp. of China Ltd declined 2.08 percent and Angang Steel fell 1.60 percent in Shanghai, while PetroChina Co Ltd gained 1.62 percent and Sands China Ltd rose 2.20 percent in Hong Kong.