Chinese shares continued to rally on Friday, gaining momentum from Thursday’s rebound as government measures to support the volatile market start to have an impact.
The Shanghai Composite was up 4.8% to 3,887.68 in early trade after ending the previous session higher nearly 6%.
The move upwards is a sharp contrast to stocks losing a third of their value since mid-June despite support efforts.
Hong Kong’s Hang Seng was up 1.9% to 24,854.76 – as contagion fears eased.
China’s measures to stem the sell-off so far include banning short-selling, threatening to arrest people speculating in the market, allowing state-owned pension funds to buy stocks, along with injecting money into the market through margin lending.
But Evan Lucas, market strategist at trading firm IG said the government’s response to the past 18 days of turmoil would “create perceptions that further liberalisations and free market principles will be abandoned as Beijing grapples with additional regulations”.
“This will create longer-term issues,” he added.
The rest of Asia was also higher after Greece proposed new reforms in its bid to strike a deal with creditors in the debt crisis.
Greece’s new measures to boost revenue included getting rid of tax breaks for islands – paving the way for a cash-for-reform deal with creditors.
Japan’s Nikkei 225 index was 0.4% to 19,925.27 – erasing earlier losses.
In Tokyo, the dollar rose to 121.69 yen from 121.34 yen in US trade.
Australian shares, however, headed higher in early trade, with mining stocks up on a jump in iron ore prices overnight.
The benchmark SP/ASX 200 index was up 0.7% to 5,508.50.
Price of Australia’s biggest export, iron ore, rose about 10% – but it still remains at half the level of a year ago.
Shares of heavyweight miners BHP Billiton and Rio Tinto were up 1.9% and 2.1%, respectively.
In South Korea, shares headed higher despite data showing that import prices fell for the 34th consecutive month in June, but the pace of declines eased.
The Bank of Korea said import prices in won terms fell 14% in June from a year ago – marking the smallest drop since December.
The benchmark Kospi index was up 0.3% to 2,034.17 points.