China, Japan markets rise as energy rebounds

Markets in China and Japan edged up Friday, capping a week of recovery for the region’s energy shares.

The Shanghai Composite Index SHCOMP, +0.43%  ended the morning session 0.1% higher at 3614.22, while Japan’s Nikkei Stock Average NIK, -0.11%   was up 0.2% at 18820.12. Taiwan’s Taiex index was up 0.2% at 8351.07.

Most other markets, including Hong Kong, Australia and Singapore, were closed for Christmas Day and traded in a shortened session Thursday.

The region is recovering from a slump in commodity prices this year that has dragged down the energy and materials sectors globally. Brent crude, the global benchmark, fell to its lowest level since 2004 on Monday. U.S. crude oil rose 5.7% this week to $38.10, snapping a three-week losing streak, but prices are still down more than 28% this year on concerns over a global supply glut.

For the week, Australia’s S&P ASX 200 and Hong Kong’s Hang Seng Index have each gained nearly 2%. Australian energy shares have gained 6.5% this week, the sector’s strongest performance since the week ending Nov. 20.

Within energy in Japan, JX Holdings Inc. 5020, -0.45%   was up 0.7% while Inpex Corp. 1605, -1.61%  fell 0.6% on Friday.

Of large-cap stocks, medical devices manufacturer Terumo Corp. 4543, +1.50% was up 2.3%, the best performer so far, while utilities firm Kansai Electric Power Co. 9503, -5.47%  was down 3%, the worst performer.

Shares of Mitsubishi Heavy Industries Ltd. 7011, -4.64%  were down 3.9% after the company said Thursday that it would delay delivery of its first commercial jetliner to airline customers by about a year, until 2018. The firm said it had identified several areas requiring further investigation since the airliner’s first flight in November, including a need to strengthen the jet’s airframe.

In China, investors are watching an aggressive buying streak by domestic insurers that has helped push up shares more than 5% this month.

Insurance shares suffered the heaviest losses Friday morning, with China Life Insurance Co. falling 2.3% and New China Life Insurance Co. slipping 2%. Non-ferrous metal and brokerage shares also dropped, weighing on the index.

On Thursday, China’s insurance regulator raised transparency requirements for insurance funds, saying they had to disclose plans to buy stakes up to 5% of listed firms and their sources of funding. The move cooled investor enthusiasm for Chinese blue chips, pushing down the Shanghai Composite by 0.6% the previous session.

Some analysts expect the blue-chip-led rally to last, as stocks with lower valuations may be favored by funds who prefer to invest with a longer-term view.

“At least 600 billion yuan worth of pension funds are expected to enter the equity market next year, in particular to buy up blue-chips,” said Simon Wang, finance director at Guoyuan Securities. “China’s SDR inclusion means more foreign funds may buy up those heavyweight stocks,” he added, referring to the addition of China’s currency to the International Monetary Fund’s elite basket of reserve currencies last month.

By early Friday, the real-estate sector on the CSI 300 benchmark was still down 1.8%. It has rallied 32% this month, compared with 7.5% for the broader benchmark, as insurers have concentrated their purchases among property stocks that pay dividends.

The smaller Shenzhen benchmark closed up 0.4% at 2356.75 at midday Friday.

Overnight, U.S. stocks slipped, put still posted their biggest weekly gains in more than a month, as investors bought energy shares.

Source: Market Watch