Stocks and Marketsin the News | Asian Markets at Close: Asia rallies with Tokyo in lead, but Shanghai lags

By V. Phani Kumar and Chris Oliver, MarketWatch 

HONG KONG (MarketWatch) — Asian markets were broadly higher Friday, with Japan’s Nikkei ending at its highest level in over three months as the yen continued to weaken, while HSBC Holdings PLC led banks higher in Hong Kong. 

Piper Jaffray sales trader Andrew Sullivan in Hong Kong said regional markets also got a boost as traders closed out short positions ahead of the weekend amid improving investor sentiment over the short-term outlook. 

“Stimulus expectations are being managed as investors realize that we are in the holiday period and the chance of any action is limited,” Sullivan said. 

Reuters

He added that investors appear resigned to the fact that coordinated action to bolster asset markets might not be forthcoming from global monetary authorities until September. 

Also helping to boost stocks in Tokyo, the Japanese government forecast nominal economic growth outpacing real growth in the fiscal year ending March 2014, marking a reversal of deflationary trends in place for 16 years.

In late Friday trade the Asia Dow was up 0.1% at 2,721. Japan’s Nikkei Stock Average JP:100000018 +0.77% climbed 0.8%, rising further after its 1.9% jump the previous day, as waning expectations for quantitative easing from the U.S. and remarks from European leaders weakened the yen, thus aiding exporters. 

Sumitomo Mitsui Trust Group Chief Investment Officer Masashi Oda said that while Japanese corporate earnings forecasts continue to be revised down, many stocks were still good buys.

“The Japanese equity market still offers attractive investment opportunities, and we strongly believe that current share prices do not reflect the healthy fundamental position that most companies enjoy,” Oda said. 

 

Dangers of getting rich in China A warning to foreign companies that link up with enterprises run by the celebrated rich in China: In the Middle Kingdom, the business elite that's highly public can get increased, and often deadly, scrutiny. Photo: Reuters.

In other regional action, Australia’s S&P/ASX 200 AU:XJO +0.92%  advanced 0.9% and Hong Kong’s Hang Seng Index HK:HSI +0.77%  rose 0.8%. 

South Korea’s Kospi KR:SEU -0.58%  went the other way, losing 0.6%, with heavyweight Samsung Electronics Co. sliding amid concern over its patent litigation with Apple Inc. AAPL +0.87%

Friday’s gains followed an overnight rally for U.S. shares, helped in part by German Chancellor Angela Merkel’s comment Thursday that her nation will do whatever it can to keep the euro. Read more on Merkel comments. 

 

In the wake of the remarks, Japanese financials were generally trading higher, with Mitsubishi UFJ Financial Group Inc. JP:8306 +2.21% MTU +0.66%  rising 2.2%, Sumitomo Mitsui Financial Group Inc. JP:8316 +2.03% SMFG +0.81%  gaining 2%, and Nomura Holdings Inc. JP:8604 +1.79%   NMR +3.54%  ended flat. 

The comments also helped the yen ease lower, as the euro EURJPY +0.15%  rose above the ¥98 level, and as weakness in Japanese bond yields helped the dollar USDJPY +0.11%  advance to above ¥79. Read more on currencies. 

 

Among Tokyo-listed exporters, Honda Motor Co. JP:7267 +2.44% HMC +2.31%  added 2.4%, Nikon Corp. NINOY +1.97% JP:7731 +1.40%  gained 1.4% and Fanuc Corp. JP:6954 +2.21% FANUF +0.32%  rose 2.2%. 

Japanese techs also got a lift from the strong advance in their U.S. peers, with the tech-heavy Nasdaq COMP +1.04%  closing 1% higher. 

Shares of Toshiba Corp. JP:6502 +3.73%   TOSYY +2.72%  added 3.7% after a Nikkei report that it had developed an engine magnet that didn’t need a key China-sourced rare earth. Read more on report of new Toshiba engine.

Sharp Corp. JP:6753 +5.14% SHCAF 0.00% rose 5.1% after a separate Nikkei report that it may sell off its copier and air-conditioner operations. Sharp later denied the report. 

Over in Seoul, heavyweight Samsung Electronics Co. SSNLF +5.36% fell 3.8%.

A judge hearing Samsung’s patent dispute litigation with Apple reportedly said there were risks for both sides if the case went to verdict. Read AllThingsD report on latest Samsung-Apple case developments.

Also pressuring the broader Korean market, LG Electronics Inc. shed 2.5%. 

In Hong Kong, shares of Tencent Holdings Ltd. HK:700 +1.47%   TCTZF +4.36%  climbed 1.5% after its recent strong earnings report, with insurance and energy stocks also rising in a generally positive market.

Those gains helped offset a 3.7% drop for heavyweight China Mobile Ltd. HK:941 -3.68%   CHL -7.05% , on top of its 5% tumble Thursday, when it reported weaker-than-expected results. 

Aluminum Corp. of China Ltd. ACH +0.09% HK:2600 -0.30% , or Chalco, eased 0.3% after it reported a loss for the first half. Read more on Chalco results. 

 

However, Chalco’s mainland-China listed shares shrugged off the result, finishing up 0.7%.

In other Hong Kong action, index heavyweight HSBC Holdings HK:5 +1.39%   HBC +0.82%  rose 1.4%, leading a broad advance among the financial sector and contributing the biggest points advance to the Hang Seng Index. 

Mainland Chinese shares underperformed the region, as weak economic data remained as a weight on sentiment, with investors also shrugging off recent remarks from Premier Wen Jiabao suggesting more monetary policy action. 

The Shanghai Composite Index edged up 0.1%, trimming this week’s loss to 2.5%. The Shenzhen Composite Index ended Friday’s session 0.3% lower. 

“The message from the Shanghai Composite is that monetary policy may be becoming less tight, but it is not accommodative,” said Prakash Sakpal, an Asia economist at ING Financial Markets Research.

In other action, Australian shares gained, as earnings took center stage in Sydney. 

Santos Ltd. AU:STO +3.15%   STOSF -0.34%  jumped 3.2% despite reporting first-half profit fell by almost half, with the shares appearing to benefit from the energy firm’s rise in underlying earnings and news that it may begin its first-ever shale-gas sales in October. Read more on Santos results. 

 

Conversely, QBE Insurance Group Ltd. stocks AU:QBE -4.47% QBEIF -1.94%  plunged 4.5% despite posting a gain in profit, as the insurer lowered its dividend and reported a smaller margin than expected. Read more on QBE results. 

 

Among other banks, Australia & New Zealand Banking Group AU:ANZ +2.97% ANEWF -0.84%  rose 3% after a better-than-expected trading update. Read more on ANZ update. 

 

Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau. Chris Oliver is MarketWatch's Asia bureau chief, based in Hong Kong.