Asian Shares Rise as Traders' Focus Turns From Brexit to Easing

Shares in Asia rose Monday as investors bet that global central banks would introduce easing measures to encourage economic growth.

Japan's Nikkei Stock Average was up 0.4%, Australia's S&P/ASX 200 rose 0.2%, and Korea's Kospi gained 0.3%. Hong Kong's Hang Seng Index rose 1.8%, and China's Shanghai Composite Index gained 1.8%.

Investors across the region were buying stocks in the hopes that central banks, in particular the Bank of Japan, would soon loosen policies by cutting interest rates or expanding asset-buying programs, said Gavin Parry, managing director of Parry International Trading.

Such policies would be "equity positive," he added, as corporate borrowing costs become lower when liquidity enters the financial system.

The MSCI AC Asia Pacific Index, a broad measure of stocks in the region, was on track Monday to recoup all its losses since the close of June 23, when the U.K.'s decision to leave the European Union roiled markets and sent shares tumbling.

Investor hopes for looser monetary policies were fully apparent in China on Monday. Domestic stock investors were betting that the U.S. Federal Reserve would hold off on raising interest rates at all this year, instead of doing so twice as officials had projected, analysts said. That could keep the U.S. dollar from strengthening rapidly, and generate demand for commodities stocks, which are priced in the greenback.

In a sign of that expected demand, China's CSI 300 Materials subindex surged 3.2%. At least a dozen stocks, including Inner Mongolia Xingye Mining Co. and nonferrous metals producer Shenzhen Zhongjin Lingnan Nonfemet Co. rose 10%, hitting their daily price-movement limit.

Meanwhile, shares of China Vanke Co., China's largest real-estate developer by market capitalization, sank 10% after it resumed trading following a six-month halt. The developer has been embroiled in a high-stakes battle among major shareholders for control of the company.

"The trading resumption of China Vanke Co. means that short-term uncertainty has been exhausted and the market will continue to operate on [its] original logic," says Deng Wenyuan, an analyst at Soochow Securities. "Abundant liquidity has driven up commodities prices amid growing risk-off sentiment."

In Hong Kong, property stocks that were perceived to be undervalued led gains. Investors focused on a report last Friday from Daiwa Capital Markets that argued shares of Hong Kong-focused real-estate developers are collectively worth US$200 billion more than they are priced by the market.

Hong Kong's largest home builder by market cap, Sun Hung Kai Properties Ltd., rose 3.8%, while Cheung Kong Property Holdings Ltd. jumped 4.9%.

In other markets, the Australian dollar sank 0.4% in early Asian trade after preliminary federal election results showed a tight race between two political parties vying for control of Parliament.

Yifan Xie contributed to this article.

Write to Dominique Fong at [e-mail]

(END) Dow Jones Newswires

July 04, 2016 01:25 ET (05:25 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.