Asian stocks were higher Monday, while regional currencies and the euro also rose against the U.S. dollar after China decided over the weekend to allow greater flexibility in the yuan's exchange rate.
Tokyo’s Nikkei 225 vaulted 242.99 points, or 2.4%, to finish the week’s first session at 10,238.01
Hong Kong’s Hang Seng Index added 625.47 points, or 3.1%, to 20,912.18
Hong Kong shares were the strongest performer in the region, with Chinese companies that are also listed in Shanghai or Shenzhen leading the rally on hopes that a stronger yuan would make Hong Kong-traded shares of those companies more attractive to investors. The Hang Seng Index jumped 3.1%, also stretching its winning run into a ninth straight session.
The decision to remove the yuan's de-facto peg to the U.S. dollar "shows that those in China whose primary goal is to have a big middle class to be international have won over the malevolent side who were seeking confrontation with the West," said Mark Matthews, Asia strategist at Macquarie Research.
China plays led the Seoul market higher, with Posco rising 5.9%, Doosan Infracore Co. gaining 6.3% and Hyundai Heavy Industries advancing 4.9%.
In Tokyo, sentiment was buoyed by the Chinese moves and the surge in U.S. stock futures.
Construction equipment makers were outperforming on hopes that they may benefit from China's booming construction sector as a stronger yuan would lift their profitability. Komatsu rose 4.6% and Hitachi Construction Machinery Co. added 6.7%.
Australian shares ended higher, though they pared some early gains after the People's Bank of China left its yuan reference rate against the dollar unchanged from Friday.
Telstra Corp. stole the spotlight, jumping 3.4% with strong trading volume, as investors welcomed an agreement on the Australian government's planned national broadband network.
In foreign exchange markets, the euro and Asian currencies were higher against the U.S. dollar, fueled by the Chinese announcement on the yuan.
In the spot market, the dollar fell as low as 6.7910 yuan, before recovering a little. The greenback was buying 6.7939 yuan, from 6.8262 yuan at Friday's close. The euro was at $1.2408 U.S. from $1.2370 U.S. in late New York trade on Friday, and at ¥112.89 from ¥112.26. The dollar was at ¥90.95, from ¥90.74.
CHINA
Chinese shares overcame a shaky start to finish with their best percentage gain in more than three weeks as airlines fronted an across-the-board rally.
Shanghai’s CSI 300 Index added 84.50 points, or 3.1%, to 2,780.66
Shares of China Eastern Airlines Corp. climbed 5.6% and China Southern Airlines Co. surged 8.2% in Shanghai on hopes a stronger yuan will lower their fuel costs as well borrowing costs on foreign currency debt. In Hong Kong, the stocks gained 6.9% and 6.5%, respectively.
Elsewhere;
Singapore’s Straits Times Index moved 52.24 points, or 1.8%, higher to 2,885.64
Korea’s Kospi index gained 27.73 points, or 1.6%, to 1,739.68
Taiwan’s Taiex Index surged 142.45 points, or 1.9%, to 7,635.56
New Zealand’s NZX index tacked on 20.74 points, or 0.7%, to 3,068.25
Australia’s S&P/ASX 200 put on 60.70 points, or 1.3%, to 4,612.60
