HONG KONG - Hong Kong shares motored Thursday, rising more than six per cent 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 2.70 per cent, or 707.53 points, to 26,944.39, although that is well short of the 6.7 per cent surge seen in the opening exchanges - the index ended 3.80 per cent higher Wednesday.
But Shanghai lost 0.93 per cent, or 37.28 points, to end at 3,957.53 on profit-taking. 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 ($32 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 edges 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 120.27 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 $1.0740 and 129.17 yen against $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 71 cents to $51.13 a barrel and Brent crude for May added 73 cents to $56.28 in morning trade.
Gold fetched $1,199.20 against $1,210.60 late Wednesday.
In other markets:
- Bangkok closed flat, rising 0.02 per cent, or 0.25 points, to 1,545.11
Bumrungrad Hospital dropped 0.97 per cent to 153.50 baht, while Airports of Thailand climbed 0.34 per cent to 293.00 baht.
- Mumbai rose 0.62 per cent, or 177.46 points, to end at 28,885.21.
Diversified conglomerate Reliance Industries gained 3.40 per cent to 894.95 rupees, while Sun Pharmaceutical Industries fell 3.21 per cent to 1,113.30 rupees.
- Singapore closed down 0.01 per cent, or 0.38 points, to 3,460.30.
Commodity traders Noble Group declined 5.50 per cent to Sg$0.86 while United Overseas Bank fell 0.47 per cent to Sg$23.36.
- Jakarta closed up 0.26 per cent, or 14.32 points, to 5,500.90.
State-owned miner Aneka Tambang rose 1.66 per cent to 920 rupiah, while lender Bank Negara Indonesia lost 0.69 per cent to 7,175 rupiah.
- Malaysia's main index lost 0.05 per cent, or 0.92 points, to close at 1,849.39.
Public Bank dropped 0.73 per cent to 19.12 ringgit, Malayan Banking went down 0.63 per cent to 9.49 while AMMB Holdings gained 0.16 per cent to 6.41 ringgit.
- 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.
- Manila was closed for a public holiday.