Stocks in Hong Kong and Australia jumped to multi-month highs Wednesday as Asian markets began their 2013 journey on a buoyant note after the U.S. House of Representatives voted in favor of legislation to undo much of the fiscal cliff.
Hong Kong’s Hang Seng Index rallied 2.9% to 23,311.98 and Australia’s S&P/ASX 200 gained 1.2% to 4,705.90, pushing both indexes to their highest finish since June 2011.
South Korea’s Kospi jumped 1.7% and Taiwan’s Taiex rose 1%.
All four markets, which were on their first trading day of 2013, held their gains after the House voted 257-to-167 in favor of a Senate-approved deal to undo tax hikes and spending cuts that began going into effect at the start of the year.
“Regardless whether the U.S. bill looks like a flimsy stop-gap, the risk rally was very strong,” said Woon Khien Chia, head of Asian emerging markets research.
Mainland Chinese and Japanese stock markets remained closed for holidays.
The fiscal-cliff have been a source of concern for regional markets in the last several weeks because of its potential impact on the U.S. economy.
Analysts cautioned markets may still face headwinds in the weeks ahead as U.S. lawmakers were yet to agree to an increase in the government’s borrowing limit.
“Longer-term, the concern remains as to how sustainable it is, as the spending cut-side seems limited. Couple that with the fact that the U.S. is once again at its debt limit, and the upside looks limited,” said Andrew Sullivan, a principal sales trader at Piper Jaffray.
Chinese financial and property stocks fronted the rally in Hong Kong, with China Life Insurance Co. jumping 6.7% and Ping An Insurance Group Co. climbing 5.2%, while China Resources Land Ltd. soared 6.2%.
The rally also followed official data Tuesday showing that China’s manufacturing Purchasing Managers’ Index (PMI) remained unchanged at 50.6 in December, below expectations, but above a 50-point threshold that indicates an improvement in activity.
Meanwhile, HSBC data showed PMIs for South Korea and Taiwan also climbed back above 50 in December. Korean PMI rose to 50.1 from 48.2 in November, while the index for Taiwan shot up to 50.6 from 47.4 in November.
Strategists remained optimistic about regional equity performance in 2013 after all major Asian markets posted gains in 2012, with those at Crédit Suisse saying they retain their “bullish bias” for the year ahead.
“We believe 2013 will be a year driven by a number of country- and sector-level themes, rather than an overarching theme that drives markets up or pushes them down. … Just like 2012, we believe 2013 will be a year of stock pickers,” the strategists wrote in a note to clients.
Financial stocks also rallied in Seoul, where Woori Financial Co. jumped 3% and Hana Financial Group Inc. rose 4.6% in Seoul.
Commodity stocks climbed across the region as prices of crude oil and several metals rose.
Cnooc Ltd. gained 3.1% and Aluminum Corp. of China Ltd. jumped 6.2% in Hong Kong, while BHP Billiton Ltd. rose 2% and Rio Tinto Ltd. climbed 2.4% in Sydney. Steel maker Posco added 3.3% in Seoul.
The rise in Posco shares came after the company and its consortium partners agreed to buy a 15% stake in an ArcelorMittal-controlled iron-ore mining firm in Canada for $1.1 billion.
Marketwatch
