A late rally into the green in China sent shares in Hong Kong to an 11-month high Tuesday, as financial stocks helped tug investor sentiment toward the upside after a bearish trading day.
China's Shanghai Composite closed up 31 points, or 1%, to 3147.79, after the index fell through the 3,000-point benchmark intraday for the first time in over a year. The Hang Seng jumped 217 points, or 0.9%, to 24,939.15, pulled higher by a late surge in
China Life Insurance
. In Japan, the Nikkei dropped 148 points, or 1.1%, to 13,547.82, as investors mulled a weak trading day overnight in the U.S.
"The selloff in A-shares will continue in the short term as new policy released by China's government will encourage investors to sell their stocks as soon as possible. However, it seems the selloff doesn't have too much pressure on Hong Kong's stock market," said Castor Pang, a buy-side analyst for Sun Hung Kai in Hong Kong.
Pang said that the Hang Seng is holding up against the weakness in A-shares because most Hong Kong-listed stocks are already fairly priced and because locals are taking their cues from the performance of U.S. markets rather than domestic Chinese markets.
In Singapore, commodities remained high throughout the day, as gold rose to $922.40 an ounce, and crude oil was fetching $114.82 by the end of the Asian trading session.
jumped 6.5%, to HK$10.78, and
Sinopec Shanghai Petrochemical
leapt 5.1%, to HK$7.85, after it was announced that Beijing may provide subsidies to offset the companies' declining profit margins on downstream operations as a result of domestic Chinese price caps.
rose 1.6%, to HK$14.04.
Yanzhou Coal Mining
announced that it increased net profit by 36% in 2007, to 3.23 billion yuan ($462 million). Yanzhou H-shares surged 7.4%, to HK$13.10, propelled by a large foreign buyer during the mid-afternoon. The shares fell back slightly from the day high of HK$13.36 after some investors entered into a technical trade in which they bought gold miner
and sold Yanzhou simultaneously.
Zijin spent the day in the red but entered the green as Yanzhou fell from its high, finishing up 0.8%, at HK$7.19. The Yanzhou-Zijin trade is expected to continue for the remainder of the week, according to dealers.
Financials fared well, with China Life Insurance staging a late-session rally to finish up 2.2%, at HK$30.45.
Hong Kong Exchanges
gained 1%, to HK$148, and
Hang Seng Bank
added 1%, to HK$152.40.
lagged behind after the telco leader announced that it missed earnings estimates Monday, and dropped 2.1%, to HK$131.90. Many expect the stock to continue bleeding throughout the week, after sharp gains recently.
In Japan, the yen weakened intraday but strengthened back to around 103 yen vs. the dollar by the end of the trading session. Still, stocks performed badly as most investors cashed in profits.
fell 2.7%, to 4510 yen, and
lost 2.6%, to 5240 yen.
held up best, easing just 1.5%, to 58,100 yen. Traders are now waiting to see if the stock can test the 60,000 yen benchmark, which has not yet been reached so far this year.
Elsewhere in Asia, markets were mixed. Taiwan's Taiex fell 0.5%, to 9037.25, and South Korea's Kospi slumped 0.7%, to 1787.49. In India, the Bombay Sensitive Index ended 0.3% higher, at 16,783.87.
Be sure to check out the Far East Portfolio at Stockpickr.com to find out which Indian and Chinese companies are making big moves and announcing major news.
Daniel M. Harrison is a business journalist specialising in European and emerging markets, in particular Asia. He has an MBA from BI, Norway and a blog at
. He lives in New York.