Asia report: Tech shares lead gains in Japan, Hong Kong

Stocks were mostly higher in the Asia-Pacific region on Wednesday, with technology shares leading the gains in Japan and Hong Kong.

In Japan, the Nikkei 225 was up 3% at 28,040.16, as the yen weakened 0.17% against the dollar to last trade at a round JPY 121.

Technology conglomerate SoftBank Group led the gains, surging 7.22%, while among the benchmark’s other major components, automation specialist Fanuc was up 3% and fashion firm Fast Retailing jumped 5.21%.

The broader Topix index was ahead 2.33% by the end of trading in Tokyo, closing at 1,978.70.

On the mainland, the Shanghai Composite gained 0.34% to 3,271.03, and the smaller, technology-heavy Shenzhen Composite rose k0.54% to 2,163.20.

South Korea’s Kospi was ahead 0.92% at 2,735.05, while the Hang Seng Index in Hong Kong advanced 1.21% to 22,154.08.

Chinese consumer technology giant Xiaomi jumped 4.08% in the special administrative region, after it announced an ongoing share repurchase worth up to HKD 10bn.

The announcement came on the back of a 21.4% improvement year-on-year in fourth quarter revenue, also announced by the company on Wednesday.

Seoul’s blue-chip tech plays were more muted and finished in a mixed state, with Samsung Electronics eking out gains of 0.28%, and SK Hynix finishing flat.

Oil prices rose through the Asian session and were higher at the end of the day, with Brent crude futures last up 2.54% on ICE at $118.41 per barrel, and West Texas Intermediate ahead 2.33% on NYMEX at $111.84.

“Asian stocks are in the green while US and European futures are also adding to recent gains, with the S&P 500 halving its year-to-date losses on the back of its recent rally,” said Exinity Group chief market analyst of the global situation on Wednesday.

“It’s tough to find a watertight explanation for such risk-on behaviour in light of the looming threats, with the still-raging war between Russia and Ukraine compounding the risks of an ultra-hawkish Fed.

“Bond outflows are perhaps finding their way into equities, but the two asset classes are sending out different messages.”

Tan said that, while bond investors were “blaring on the recession foghorns”, stocks appeared more receptive to the Fed’s rosier outlook, as the central bank insisted that the US economy was strong enough to withstand higher interest rates.

“The stock bulls’ narrative assumes that companies have enough pricing power to pass on higher costs to enough customers with enough jobs, thus preserving profit margins, at least for 2022.

“One cannot also rule out the ‘TINA’ - there is no alternative - mantra having its say on fund allocations for the time being.

“Still, it may require further positive justification in order to sustain the advance in global stocks.”

In Australia, the S&P/ASX 200 added 0.5% to 7,377.90, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was the region’s odd one out, falling 1.18% to 12,061.00.

The down under dollars were both weaker against the greenback, with the Aussie last off 0.02% at AUD 1.3390, and the Kiwi retreating 0.14% to NZD 1.4380.