HONG KONG (Nikkei Markets) -- Asian shares outside of Japan advanced Friday, driven by a surge in Indian equities after the nation cut corporate tax to one of the lowest in Asia.
The Nikkei A300 Index rose 0.7% to close at 1,275.15.
India's benchmark stock index, the BSE Sensex, jumped 5.3% -- its biggest percentage gain in more than a decade -- after the country's finance minister announced that corporate tax rate will be reduced to 22% and 15% for local companies and new entities setting up manufacturing operations from Oct. 1, subject to firms not availing themselves of any exemptions or incentives. The cut in the corporate tax rate comes at a time when Asia's third-largest economy is battling an economic slowdown. India's economic growth slowed to 5% in the June quarter, the slowest in six years.
Worries over growth have prompted foreign investors to pare their holdings of Indian stocks this year. Since the beginning of July, foreign investors have taken out $5 billion from Indian equities.
"The surprise India move was the highlight of an otherwise dull day in Asia after a tumultuous week," said Jeffrey Halley, a senior market analyst at Oanda. "The fiscal steps are likely to re-energize investor interest in the sub-continent."
Shares of Indian financial firms were among the biggest winners on Friday, with the BSE Bankex index surging 8.2%. HDFC Bank jumped 9.1%, while peer ICICI Bank gained 8%. Heavyweight Reliance Industries ended 6.4% higher.
Elsewhere in the region, shares ended mixed as investor attention turned to U.S.-China trade following resumption of talks between the two sides.
The U.S. and China resumed deputy level trade talks yesterday ahead of negotiations planned early next month between U.S. Trade Representative Robert Lighthizer, Treasury Secretary Steven Mnuchin, and Chinese Vice Premier Liu He.
Meanwhile, China on Friday lowered its one-year Loan Prime Rate to 4.20% from 4.25% a month ago. The LPR mechanism last month became the main interest rate reference for loans in the mainland.