ASIA MARKETS: China Stocks Up More Than 3% To Lead Asia Markets

By Sarah Turner and V. Phani Kumar, MarketWatch

HONG KONG (MarketWatch) -- Mainland Chinese shares surged Monday to lead Asian equities by a wide margin after a regulator said the country will grant foreigners greater access to its stock markets, with financials fronting the rally.

The Shanghai Composite Index jumped 3.1% to end the day at 2,311.74, its highest finish since June 18, while the Shenzhen Composite Index surged 3.6% to 918.33. The advance more than recovered the losses they suffered Friday, when investors locked in profits.

Elsewhere, Hong Kong's Hang Seng Index climbed 0.6%, South Korea's Kospi rose 0.5%, Australia's S&P/ASX 200 index gained 0.2% and Taiwan's Taiex inched up 0.1%.

The rally in China followed comments after Guo Shuqing, chairman of the China Securities Regulatory Commission, reportedly said the country could substantially increase the amount foreigners are allowed to invest in local equity markets.

Reports of strong recent inflows into global equity markets and hopes that strong liquidity would further push up stocks also aided the broad advances.

Japanese markets were closed Monday for Coming of Age day, but the yen lost more ground against major rivals, extending its steep recent losses on hopes for further monetary easing.

Ben Kwong, chief operating officer at KGI Asia, said other Asia markets were also feeling the effect of yen weakness in the form of additional liquidity, given that Japan was a source of cheap money.

"Investors are looking for excuses to buy rather than sell," he said, and are focusing on an economic recovery in China and the subsequent better performance of mainland Chinese yuan-denominated stocks, known as A-shares. "A-shares are up, and companies involved in A-shares benefit from that," Kwong said, citing the example of brokerages and insurers.

In Monday's trade on mainland bourses, Sinolink Securities Co. in Shanghai and Ping An Bank Co. in Shenzhen jumped by the day's 10% limit.

Among other notable gainers, Citic Securities Co. rose 6.9% and Haitong Securities Co. advanced 7% in Shanghai, while Hong Yuan Securities Co. and Guoyuan Securities Co. added 6.2% and 5.5%, respectively, in Shenzhen.

Also contributing to the rally, Shanghai-listed shares of Great Wall Motor Co. (2333.HK) climbed 6.2% after a Xinhua news report Saturday cited a company spokesman as saying the vehicle maker was targeting sales of 700,000 units this year, up from 620,000 units in 2012. In Hong Kong, the stock added 5.1%.

Financials also outperformed in Hong Kong, where BOC Hong Kong Holdings Ltd. (BHKLY) rose 3.2% and Ping An Insurance Group Co. (PNGAY) gained 2.9%.

Missing out the rally, logistics giant Li & Fung Ltd. (LFUGY) plunged 15.4% after warning core operating profit for the past year could tumble as much as 40%.

The gains in broader Asia came after Wells Fargo & Co. (WFC) kicked off the fourth-quarter reporting season for major U.S. banks Friday, posting revenue and earnings that topped analyst expectations, but with lower net interest income.

Crédit Agricole's Hong Kong-based strategists said that earnings out this week, especially from the financial sector, would help dictate the direction of global stock-market action and appetite for risk-taking over the coming days.

"Hope and faith in global economic recovery, helped by data releases in the U.S. and China in particular, have helped to calm markets, while there is little angst as yet about the looming debt-ceiling/spending-cut negotiations in the U.S." they said.

In Seoul, meanwhile, Hyundai Motor Co. (HYMTF) advanced 1.5% and heavyweight Samsung Electronics Co. (SSNLF) added 1.2% to lead broad market gains.

In Sydney, real-estate firms saw some buying, with Mirvac Group (MRVGF) up 1.3%, Stockland Australia (STKAF) adding 1.4% and Fkp Property Group (FRKPF) 3.2% higher.

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