HONG KONG: Asian shares mainly rose on Monday, led by a surge in China as hopes for more market intervention and state-backed mergers overshadowed fresh weak economic data from the world’s number two economy.
Meanwhile, the dollar gained against the yen after upbeat jobs data on Friday added to expectations the US central bank will raise interest rates as early as September.
Tokyo equities scraped back earlier losses to close up 0.41 percent and Sydney added 0.63 percent.
Shanghai led the gains, with shares closing up 4.92 percent on speculation the government will accelerate mergers between state-owned enterprises and release new funds to support the market.
“Though the economy as a whole is not performing quite well, it may lead to more loosening of monetary policy,” Zhang Qi, an analyst from Haitong Securities, told Agence France-Presse.
“There might also be more state investment and reform of state-owned enterprises.”
Hong Kong clawed back early losses to end the day down 0.13 percent, while Seoul bucked the regional trend to close 0.35 percent lower.
Beijing has unleashed unprecedented measures to support equities—including a crackdown on short-selling, suspension of new offerings and a ban on major shareholders selling their stakes—since the market collapsed in mid-July.
Stocks surged for a second day after China’s securities regulator late on Friday said it had called on brokers and fund managers to help stabilize the market.
Reports that Beijing plans to merge two major shipping companies, China Shipping Group and Cosco Group, also stirred speculation it could herald a shake up of the country’s inefficient state-owned enterprises.
The news drove state-backed companies higher—China Shipbuilding Industry Co., China Coal Energy Co., and China United Network Communications Ltd. all surged by the 10 percent daily limit.
Railway firms also gained. In Shanghai, China Railway Construction soared 9.49 percent to 18.34 yuan while China Railway Erju also climbed 8.31 percent to 17.07 yuan.
“State-owned enterprise mergers are an investment theme that’s quite certain and there are signs that the move will speed up,” Li Jingyuan, a general manager at Shanghai Zhaoyi Asset Management, told Bloomberg News.
Disappointing trade data
The gains came after trade data showing China’s exports plunged 8.3 percent from a year earlier, while imports dropped 8.1 percent, added to concerns over the health of Asia’s largest economy.
Beijing on Sunday said inflation rose 1.6 percent in July, well below the government’s annual target of three percent, while producer prices declined to their lowest level since late 2009.
The news will likely hit commodities and particularly base metals, analysts said, which plumbed to multi-year lows last week over signs demand is waning in massive importer China.
Higher rates tend to push up the US currency, which in turn makes dollar-priced commodities less attractive to international investors and so dents prices.
Gold fetched $1,094.70, slightly higher than $1,089.64 late Friday and above last week’s nadir of $1,072.34—its lowest level since February 2010.