Stock markets in China and Hong Kong advanced Wednesday on speculation that the People's Bank of China will cut interest rates soon to help the economy regain its growth momentum.
Hong Kong's Hang Seng advanced 0.98 percent, or 179.67 points, to 18,438.70, and Chinese Shanghai Composite edged up 0.06 percent.
The Chinese official newspaper, China Securities Journal, said in a commentary Wednesday that PBOC should cut rate soon to avert volatile economic growth and boost confidence.
In order to avoid a widening fluctuation of economic growth, it is now necessary to cut interest rates. If the economic indicators in May continue to show moderating or even decelerating growth, it is possible that economic growth in the second quarter of the year will be under 7.5 percent and the economy will be far from bottoming out, Reuters reported, citing the official China Securities Journal.
However, the article ruled out the possibility of a stimulus like the one in 2009 when the government injected a massive stimulus of $635 billion (4 trillion yuan).
Meanwhile, better-than-expected U.S. services PMI and the emergency teleconference among G7 leaders Tuesday, during which they decided to work jointly to sort out the debt crisis, also added to the positive sentiment. The Institute for Supply Management's Non-Manufacturing Purchasing Managers Index rose to 53.7 in May, from 53.5 in April.
In Hong Kong, property, energy and material stocks rallied. Henderson Land Development Co. gained 3.88 percent. and CNOOC Ltd. surged 3.61 percent, while Wharf Holdings advanced 3.52 percent after its price target was raised to HK$56 at Citigroup.
In Shanghai, Jiangxi Copper advanced 1.09 percent, and China Vanke gained 0.51 percent, while Huaneng Power International rose 1.49 percent.