By Chao Deng
Asian markets rose Monday, with Australia's S&P ASX 200
taking another stab at an elusive seven-year high with the help of
gains in mining stocks, and Shanghai shares jumping on the latest
rhetoric from Beijing on reform.
The Shanghai Composite Index finished 3% higher at 4527.40,
after local reports that China is planning a new wave of mergers in
the state sector, reducing the number of companies owned by the
central government by nearly two-thirds. Monday's rise was the
second-biggest of the year, and continued seven straight weeks of
gains.
The planned mergers, reported by a newspaper run by the official
Xinhua News Agency--citing unnamed sources--would focus on
industries not dominated by the state, and likely cut the number of
such state-owned enterprises to about 40 from 112 now.
"This story is getting a lot of attention today," said David
Welch, head of Asian equity distribution at Hong Kong-based
financial group Reorient Group. "SOE reform euphoria [is] driving
sentiment," he added, with shipping, oil and telecom stocks
outperforming on merger chatter.
The effects were seen in Hong Kong, where the Hang Seng Index
gained 1.3% to 28433.59. Top gainers among index stocks were
state-owned China Petroleum & Chemical, up 7.2%, and Petro
China, up 6.7%.
Another top performer in Hong Kong was HSBC Holdings, whose
stock surged 3.4% after the bank's management confirmed that a
broader strategic review is under way, alongside a review of the
location of its headquarters. Goldman Sachs expects HSBC to
announce the review's conclusions at its investor update on June
9.
Australia's S&P ASX 200 was close to joining a number of
Asian benchmarks that have hit major milestones this year. It
finished less than 20 points short of 6000, a level not breached
since January 2008, though it has come close more than once in
recent weeks. The index ended the day up 49.4 points, or 0.8%, at
5982.7.
"It was again all about the commodity stocks, with the huge
rebound seen in spot iron ore having a positive effect on
sentiment," Tristan K'Nell, head of trading at Quay Equities in
Sydney, said.
Rio Tinto and BHP Billiton, two of the world's biggest producers
of iron ore, rose 3.4% and 1.6%, respectively, after the iron-ore
price continued its push back above US$50 a metric ton last
week.
Fortescue Metals Group, which unlike larger rivals BHP and Rio
is focused strictly on iron ore, ended 16% higher. That brought its
rise in the past three trading sessions--since it issued bonds to
refinance a chunk of its debt--to 35%.
The S&P ASX 200 is up 11% this year, playing catch-up after
finishing virtually unchanged last year, added AMP Capital's
investment strategist Shane Oliver. Some economists expect
Australia's central to bank to cut rates for the second time this
year when it meets next week.
Taiwan's tech-heavy Taiex traded past 10000 during the day for
the first since February 2000, reflecting last week's record on the
Nasdaq Composite. The Taiex finished up 0.6% at 9973.12, a 15-year
high.
The Nikkei Stock Average fell back below the 20000 ahead of
monetary-policy announcements from both the U.S. and Japanese
central banks later this week. The benchmark slipped 0.2% to
19983.32 in thin trading.
"With markets so policy-driven, and earnings reports starting to
build from this week, there is little for investors to do but sit
and wait," said Kenichi Hirano, CEO at K Asset Management. Global
investors are watching for cues from the Federal Reserve which is
now expected to hold off raising rates until as late as
December.
The continuing debate over the Trans-Pacific Partnership free
trade agreement is also being watched by investors, as it carries
the potential to affect Japan's tariff system, added Eiji Kinouchi,
chief technical analyst at Daiwa Institute of Research.
Shares of cosmetic maker Shiseido fell 5% after the company put
its outlook for current-year operating profit at Yen28 billion,
short of expectations of about Yen30 billion. Analysts pointed to
weakening Chinese demand.
Bradford Frischkorn contributed to this article.
Write to Chao Deng at Chao.Deng@wsj.com
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