Asia: Markets mostly down but Hong Kong soars

[HONG KONG] Hong Kong shares motored on Thursday, rising almost seven percent over two days, as mainlanders pile into the market, but most other Asian equities retreated after minutes from the US Federal Reserve showed policymakers split on when to hike interest rates.

Wall Street provided a healthy platform for regional investors while the dollar ticked higher.

Hong Kong jumped 3.10 per cent in the afternoon but well down from the 6.7 per cent surge seen in the opening exchanges - the index ended 3.80 per cent higher on Wednesday.

Tokyo rose 0.75 per cent, or 147.91 points, to 19,937.72 thanks to a weaker yen but Sydney lost 0.48 per cent, or 28.53 points, to close at 5,932.20 and Seoul was marginally lower, dipping 0.39 points to 2,058.87.

Shares in Hong Kong surged for a second day as mainland investors capitalise on the Stock Connect scheme with Shanghai that allows them to trade a limited amount of shares in the southern Chinese city, and vice versa.

The programme was initially met with scant interest, but mainland authorities' decision last month to expand the number of fund-management firms allowed to buy in Hong Kong has seen activity surge and on Wednesday turnover hit a record HK$250.03 billion (S$43.7 billion).

"The catalyst for the rally in Hong Kong was the allowance by the Chinese securities regulators to have Chinese mutual funds be able to invest in Hong Kong listed companies," Mark Matthews, Singapore-based head of Asia research at Bank Julius Baer & Co., told Bloomberg TV.

On Wednesday traders on both sides of the border for the first time used up their daily quota of deals allowed under the link-up.

Shanghai stocks have been rising for more than a year as retail investors bet - often using borrowed money - on authorities loosening monetary policy further to support the world's number two economy.

DOLLAR TICKS UP

The central bank has already cut interest rates twice since November, while Premier Li Keqiang last month suggested the government had the weapons to support growth if necessary.

On currency markets the dollar rose to 120.25 yen from 120.14 yen in New York, and well up from 119.91 yen in Tokyo earlier Wednesday, after minutes from the latest Fed meeting were released.

The minutes revealed "several participants" thought conditions were right for a June rate hike, but others did not think the economy was strong enough for such a move until later in the year and "a couple" said 2016 was a better option.

Differences of views within the Fed countered an earlier market conviction that a June hike was now off the table.

"The... minutes show there were a few supporters for a June rate hike," said Naohiro Nomoto, an associate for currency trading at Bank of Tokyo-Mitsubishi UFJ in New York.

"There seems to be serious talk of a June increase, so there was some dollar buying amid the hawkish tone," he told Bloomberg News.

The euro bought US$1.0763 and 129.43 yen against US$1.0780 and 129.52 yen in US trade.

On Wall Street the Dow added 0.15 per cent, the S&P 500 rose 0.27 per cent and the Nasdaq gained 0.83 per cent.

Oil prices rebounded after a steep fall on Wednesday that came in reaction to another huge rise in US stockpiles and record output in crude kingpin Saudi Arabia.

US benchmark West Texas Intermediate for May delivery advanced 52 cents to US$50.94 a barrel and Brent crude for May added 53 cents to US$56.08 in morning trade.

Gold fetched US$1,195.50 against US$1,210.60 late Wednesday.

In other markets: - Taipei was a tad lower, slipping 3.93 points to 9,568.04.

Taiwan Semiconductor Manufacturing Co was unchanged at TW$143 while Hon Hai Precision Industry closed 0.75 per cent lower at TW$93.0.

- Wellington gave back 0.21 per cent, or 12.55 points, to end at 5,847.17.

Spark New Zealand was down 1.34 per cent at NZ$2.94 while Fletcher Building eased 0.84 per cent to NZ$8.24.

AFP