Asia: Markets rally on fresh trade hope, elections lift Hong Kong

[HONG KONG] Asian markets rose on Monday on fresh optimism over the long-running China-US trade talks after Beijing offered an olive branch on the key issue of intellectual property, while Donald Trump hailed progress on the agreement.

Hong Kong stocks led the regional advance with pro-democracy parties on course for a landslide in local elections that could put pressure on the local government and Beijing to act after months of protests that have hobbled the city's economy and transport.

The week got off to a strong start after China said at the weekend it would hike penalties on violations of intellectual property rights while also look at reducing the thresholds for criminal punishments of those who steal IP.

The IP issue is a major sticking point for the United States in the discussions and agreement on it is seen as key to their success.

Mr Trump on Friday told Fox News the deal was "potentially very close".

Global markets have rallied in recent weeks on expectations the economic superpowers will sign a mini pact as the first part of a wider trade deal, though dealers are growing edgy at the lack of detail from either side.

There are also concerns about how tariffs will be wound back, with China insisting they are lifted as part of any agreement.

'STICKING POINT'

On Monday, Tokyo ended the morning session 0.9 per cent higher, while Shanghai rallied 0.5 per cent and Seoul piled on more than one percent. Singapore jumped 0.4 per cent, Sydney climbed 0.5 per cent and Taipei gained 0.2 per cent, with Wellington also rising.

"The markets are pretty much priced for a deal to go ahead, and that may be the case, but we may see that pushed out to 2020," Eleanor Creagh, market strategist at Saxo Capital Markets, told Bloomberg TV.

"We can see China make concessions on intellectual property... also on the currency and agricultural purchases. But the key sticking point is really going to be the rolling back of tariffs."

Hong Kong was the standout performer, surging 1.8 per cent in the morning as pro-democracy candidates headed for a huge win in community-level elections.

The results will send the Beijing-backed government a clear message of broad public support for the demands of a protest movement that has gripped the territory for months.

It will "be difficult for Beijing to ignore these results for fear of greater international condemnation in the court of public opinion", said AxiTrader's Stephen Innes. "The people have spoken, and now the ball is in Beijing's court."

Property firms, which have taken a battering as the sometimes violent demonstrations have dragged on, were among the best performers, while embattled transport network controller MTR Corp was also a big gainer.

AFP