ASIA MARKETS: Shanghai Surge Sparks Region's Rebound

By V. Phani Kumar

Shanghai stocks soared Wednesday on speculation that the Chinese government was considering a fiscal stimulus package, triggering a recovery across the region.

The Shanghai Composite jumped 5.9% to 2,482.64, adding on to its 1.1% advance Tuesday, while the Shenzhen All Share index soared 6% to 705.

The gains came after Chinese vice-premier Li Keqiang said Tuesday that there was a need to increase household incomes and rural consumption, to cope with a weakening global economy, according to reports.

Separately, J.P. Morgan analyst Frank Gong wrote in a report Tuesday that the country's top leadership was "carefully considering an economic stimulus package" of at least 200 billion to 400 billion yuan ($29 billion to $58 billion), which could be in the form of tax cuts and aimed at stabilizing the stock markets and supporting the development of the housing markets.

But some analysts were skeptical that the market gains could be sustained.

In Hong Kong, the Hang Seng China Enterprises climbed 3.7% to 11,106.55, while the benchmark Hang Seng Index rose 1.9% to 20,864.38.

"I think it's just a technical bounce and the trend is still downward," said Linus Yip, strategist at First Shanghai Securities in Hong Kong. "I think a stimulus package won't be able to give an instant boost to the Chinese economy, which is passing through a difficult time," he added.

The surge in Shanghai helped stocks elsewhere stage a rebound from early lows.

ASIA MARKETS: Shanghai, Hong Kong Stocks Surge

By V. Phani Kumar

Chinese stocks in Shanghai and Hong Kong soared Wednesday, shaking off weak sentiment that hurt their performance over the last several days, on speculation the mainland government was considering a fiscal stimulus package.

China's Shanghai Composite jumped 5.8% to 2,479.31 in morning trading, adding on to its 1.1% advance Tuesday.

In Hong Kong, the Hang Seng China Enterprises climbed 3.1% to 11,045.52, while the benchmark Hang Seng Index rose 1.7% to 20,836.47.

The gains came after Chinese vice-premier Li Keqiang Tuesday said that there was a need to increase household incomes and rural consumption, to cope with a weakening global economy, according to reports.

But some analysts were skeptical the market gains could be sustained.

"I think it's just a technical bounce and the trend is still downward," said Linus Yip, strategist at First Shanghai Securities in Hong Kong. "I think a stimulus package won't be able to give an instant boost to the Chinese economy, which is passing through a difficult time," he added.

Meanwhile, the Nikkei 225 Average gave up 0.3% to 12,828.54 and the broader Topix index fell 0.5% to 1,229.23.

Moving the Market

BRIEFING.COM: News flow was relatively light Monday, but participants still found an excuse to take money off the table. Their selling efforts pushed the major indices substantially lower; each finished a bit above their session lows.

The early morning mood had been generally upbeat, but as oil prices reversed declines, stocks were sent lower. Stocks then stayed there for the rest of the session as focus returned to the troubles of government-sponsored enterprises Fannie Mae (FNM 6.15, -1.76) and Freddie Mac (FRE 4.39, -1.46), even though crude settled lower below the $113 per barrel mark. The two were spotlighted in a weekend Barron's article that suggests the Treasury may need to recapitalize the duo sooner rather than later. Trading volume climbed in the two, but the increase was not reflected in the broader market.

The lack of volume in the broader market suggests there is no real fear in the market for this matter. Instead, it provided an excuse for participants to take profits. Despite the session's decline the stock market is still up 6.5% and the financial sector is up 22% since the July 15 low. The financial sector finished the session 3.6% lower.

Other news stories were given secondary status. In the tech sector (-1.3%), video game maker Electronic Arts (ERTS 47.76, -0.48) is letting its offer for Take-Two Interactive (TTWO 23.75, -1.09) expire tonight. However, Electronic Arts will join in Take-Two's review of strategic alternatives.