Asian markets surged on Wednesday, as Wall Street's rally gave investors the impetus they needed to resume yen carry trade positions and buy heavily into the last week's declines.

Hong Kong and China led the giant rally, with the key indices soaring 4.9% each. The Hang Seng rose 1362 points, to 29,166, while the Shanghai Composite Index jumped 254 points, to 5412.

"There are quite a lot of discounts now in Hong Kong after the last few days," says Conita Hung, head of equities at Delta Asia Finance in Hong Kong. "Liquidity is still plentiful on the mainland and interest rates are still on a downtrend in the U.S. and Hong Kong. China is increasing interest rates but the increases are still quite low."

Hung has a year-end target of 33,000 for the Hang Seng, and says that property stocks in Hong Kong will be the major beneficiaries, while financials on the mainland are attractive buying opportunities as they are shielded from sub prime exposure.

"I expect the Hang Seng to reach a new record by the end of this year, but the market will still fluctuate quite a lot over the next one and a half months," adds Hung.

Chinese telecoms were the big gainers of the day in Hong Kong, as China Mobile ( CHL) leapt 9.23%, to HK$140.80, China Unicom ( CHU) gained 6.16%, to HK$15.44, and China Netcom ( CN) rose 5.21%, to HK$21, while China Telecom ( CHA) surged 8%, to HK$5.75.

Property stocks, which have been the most resilient to the recent sell-off, rose in tandem in today's trading in Hong Kong. Sun Hung Kai Properties ( SUHJY) gained 2.3%, to HK$11.78, Cheung Kong Holdings ( CHEUY) bounced 3.52%, to HK$149.80, while Hutchison Whampoa ( HUWHY) and Henderson Land jumped 3.8% each, to HK$93.40, and HK$71.80, respectively.

Financials also fared well, with China Life Insurance ( LFC) ending the day up 6.64%, to HK$45.75, while Ping An gaining similarly, by 6.51%, to HK$95.70. UBS upgraded its rating for China Life, to "buy" from "neutral", citing an expected growth in income from premiums of 20% in the fourth quarter vs. 6.7% so far this year. UBS also said China's largest insurer was making unrealized profits of 18 billion yuan

HSBC Holdings ( HBC) rose 1.24%, to HK$139. In after hours trading, HSBC announced in London that the bank will have to write-down $1.4 billion more than was expected in the first two quarters of the year, due to losses incurred on sub prime mortgage loans. That's a total write-down of $3.4 billion for the third quarter vs. an expected $1 billion. Many say the extent of the loss may give an indication of sub prime weakness to come.

In commodity stocks, despite a weakening price for crude, PetroChina ( PTR) surged by 7%, to HK$15.74, on momentum buying, while Sinopec Shanghai Petrochemical ( SHL) rose 4.53%, to 15.68 yuan, and Aluminum Corp of China ( ACH) surged 10%, to 38.29 yuan.

The Nikkei, which fell on Monday to give away all of this year's gains, rose 347 points, or 2.47%, to 15,499, led by financial stocks and exporters, which benefited from the weakening yen.

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