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Asia300

Asian equities gain as China announces steps to boost infrastructure

China Railway Group, China Communications Construction, Anhui Conch pace advances

HONG KONG (Nikkei Markets) -- Asian shares outside of Japan rose Tuesday, led by Chinese companies following measures from Beijing to support infrastructure development.

The Nikkei Asia300 Index of companies outside Japan closed 0.9% higher at 1,287.35. China's infrastructure-related companies were among the top performers after Beijing said it will allow local governments to use proceeds from special bonds as equity for project financing. Hong Kong-shares of China Railway Group, China Communications Construction, and China Railway Construction jumped by at least 4.9% each, while Anhui Conch Cement advanced 4.8%. An index of Chinese companies listed in Hong Kong climbed 0.9%.

Morgan Stanley said the latest measures, combined with the pro-consumption package announced last week, echoes its view that Chinese policymakers would push for a larger fiscal stimulus, with a focus on direct spending.

The rally in mainland companies helped offset comments from U.S. President Donald Trump that he was prepared to impose tariffs on more Chinese goods. Trump reportedly said yesterday that he would levy tariffs of 25% or "much higher than 25%" on $300 billion of Chinese goods that are currently untaxed from earlier rounds if President Xi Jinping did not meet him at the G20 summit in Japan on 28-29 of this month.

Earlier yesterday, Trump, in an interview with CNBC, had complained about China's currency practices. He said Beijing was getting a competitive advantage by letting its currency fall and remarked that the U.S. was entitled to a fair playing field.

Michael McCarthy, the chief market strategist at CMC Markets and Stockbroking, said that while the U.S. remains "provocative," traders were "looking forward to this month's G-20 meeting in Japan as an opportunity to bring Xi and Trump closer to resolution."

In other major movers on the A300 index, the world's biggest contract chipmaker Taiwan Semiconductor Manufacturing advanced 1.9% after reporting a 7.7% month-on-month increase in sales in May.

Malaysian automotive company DRB-Hicom climbed 0.5% after its unit Proton Holdings reported better car sales in last month.

CapitaLand rose 3%. The Singaporean property company said Tuesday it agreed to sell its interests in three companies that own three malls in China to its 38%-owned unit CapitaLand Retail China Trust for 2.96 billion yuan ($427 million).

Quanta Computer advanced 1.2% after the Taiwanese company reported a 21% increase in May sales from a year earlier. Compal Electronics added 0.5% following a 6.6% rise in sales, while China Steel declined 0.4% following a 7.5% fall in its monthly sales.

--Nimesh Vora

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