China stocks rally to 7-year high, other Asian markets restrained ahead of Yellen speech

HONG KONG – Chinese stocks hit a seven-year high as investors pinned their hopes on further economic stimulus while other Asian markets were subdued ahead of a speech by Fed chair Janet Yellen.

KEEPING SCORE: Japan’s Nikkei 225 index added 0.2 per cent to 20,233.61 and South Korea’s Kospi rose 0.8 per cent to 2,138.74. Hong Kong’s Hang Seng advanced 1.4 per cent to 27,918.27. The Shanghai Composite Index in mainland China jumped 1.9 per cent to 4,617.02, the highest level since 2008. Australia’s S&P/ASX 200 was practically unchanged at 5,660.80. Southeast Asian indexes were mixed.

CHINA RALLY: Investors who weren’t allocated shares in recent initial public offerings are plowing the money back into the market, sending it higher, said Andrew Sullivan, a sales trader at Haitong Securities. They’re also betting that the economic stimulus that has powered the Chinese rally will continue after recent poor reports such as a disappointing manufacturing index on Thursday. “Even when you’ve got bad news, stocks are going up anyway,” Sullivan said. “It is just pure liquidity, it’s not fundamental in anyway.

JAPAN STIMULUS: The country’s central bank meeting made no changes to its 80 trillion yen ($660 billion) annual stimulus program, as its policy board reaffirmed its assessment that Asia’s second biggest economy was recovering moderately.

US ECONOMY: Global investors are awaiting a speech later Friday by Federal Reserve Chair Janet Yellen on the outlook for the world’s biggest economy. Stock markets are hitting record highs as investors bet the U.S. central bank will delay raising interest rates based on mixed reports on the world’s biggest economy. Data out Thursday showed U.S. home sales in April slipped on tight supply while jobless benefit applications fell to a 15-year low.

GOLDIN BOUNCE: A Chinese horse breeding, winemaking and financial conglomerate’s Hong Kong-listed units rebounded strongly a day after they plunged more than 40 per cent. Goldin Properties Holdings Ltd. jumped 10 per cent while Goldin Financial Holdings Ltd. rose 3.4 per cent. Earlier this week, another Chinese firm, Hanergy, tumbled in Hong Kong for no apparent reason before being suspended. The volatility is a sign of the rising flow of money from mainland China after the Hong Kong and Shanghai exchanges opened a trading link last year.

WALL STREET: Major U.S. stock indexes eked out another record close as energy companies gained on rising oil prices. The Standard & Poor’s closed up 0.2 per cent at 2,130.82 while the Dow Jones industrial average edged up 0.34 point to 18,285.74. The Nasdaq composite rose 0.4 per cent to 5,090.79.

ENERGY: Benchmark U.S. crude slipped 16 cents to $60.56 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.74 to close at $60.72 a barrel on Thursday. Brent crude, a benchmark for international oil used by many U.S. refineries, lost 16 cents to $66.38 in London.

CURRENCIES: The dollar declined to 120.77 yen from 121.05 yen on Thursday. The euro rose to $1.1145 from $1.1110.