Japan, Korea gain ground, Hong Kong lags

HONG KONG (MarketWatch) � South Korean and Japanese shares began a new quarter on a positive note Monday, with gains in Seoul coming after Moody�s raised the country�s credit rating outlook, while Tokyo stocks got a lift as a downbeat tankan survey weighed on the yen.

But stocks in Hong Kong fell for a fourth straight session, with Sun Hung Kai Properties Ltd. suffering further losses on uncertainty following last week�s arrest of the firm�s two chairmen.

Japan�s Nikkei Stock Average JP:100000018 �rose 0.3% to 10,109.87 and South Korea�s Kospi KR:SEU climbed 0.8% to 2,029.29.

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Australia�s S&P/ASX 200 index AU:XJO �slipped 0.1% to 4,329.30, Hong Kong�s Hang Seng Index HK:HSI gave up 0.2% to 20,522.26 and Taiwan�s Taiex XX:Y9999 declined 0.9% to 7,862.90. Mainland Chinese markets were closed for a holiday.

The day�s performance came after Asian stocks rounded out the first three months of this year with gains, including a near 20% advance for the Nikkei Average.

While U.S. stocks also ended the first quarter on an upbeat note, an official survey on Chinese manufacturing activity, released over the weekend, showed a much better-than-expected improvement in March. The result was in sharp contrast with a separate survey from HSBC the same day, which showed a contraction in monthly activity. Read more on China manufacturing Purchasing Managers� Index.

HSBC economists said the data kept Chinese monetary-policy easing hopes alive. �Once these measures filter through, growth will likely start bottoming out in the second quarter and rebound modestly thereafter,� they said.

But some others remained doubtful.

�Though this weekend�s official PMI data went some way to assuaging that concern, with a very positive official manufacturing PMI report for March, the fact that the HSBC measure did not, makes the reading questionable at best,� said Michael Hewson at CMC Markets.

Losses for some property firms kept the Hong Kong market under pressure. Sun Hung Kai Properties HK:16 SUHJY fell 2.2%, extending sharp losses made late last week after the arrest of the firm�s two chairmen on suspicion of corruption. Read more on last week's property sector losses.

The performance was mixed for other property stocks, with New World Development Co. HK:17 �NDVLF �falling 3.8%. But Cheung Hong Kong Holdings Ltd. CHEUY �HK:1 �and Sino Land Co. SNLAY �HK:83 �added 1.4% and 2.9%, respectively, to rebound from Friday�s losses.

�Not knowing the actual detail of the charges is hurting the other developers as well. What does seem to be coming clear is that these charges could go back to events around 2004,� said Andrew Sullivan, strategist at Piper Jaffray.

Meanwhile, shares of some large Australian miners � which are tied to the Chinese growth story � climbed despite a broad decline in Sydney. BHP Billiton Ltd. AU:BHP �BHP �rose 1.5%, Rio Tinto Ltd. AU:BHP � BHP �advanced 1.2% and Fortescue Metals Group Ltd. AU:FMG FSUMF climbed 2.4%.

In Hong Kong, shares of Mongolia-focused miner SouthGobi Resources Ltd. HK:1878 �CA:SGQ surged 18.2% on news Aluminum Corp. of China Ltd. HK:2600 �ACH , also known as Chalco, had agreed to buy a controlling stake in the company. Chalco shares lost 1.9% after it agreed to pay a nearly 29% premium over SouthGobi�s closing share price on Friday. See report on Chalco offer for SouthGobi.

South Korean stocks got a lift after Moody�s raised the outlook on the nation�s A1 rating to positive from stable, citing �very strong and improving� fiscal fundamentals and resilience in its external financing position. Read more on Korea outlook.

Banks led the advance, with KB Financial Group Inc. KB rising 2.8% and Shinhan Financial Group Co. SHG �advancing 2.1%. Among exporters, Hyundai Motor Co. HYMTF gained 3%.

Exporters were also propped up in Tokyo as the yen weakened against the dollar and the euro, following the tankan survey findings. Read more on Japan�s tankan survey.

Honda Motor Co. JP:7267 � HMC �rose 2.1%, Suzuki Motor Corp. JP:7269 �SZKMF �climbed 2.4% and Canon Inc. JP:7751 �CAJFF �added 2.1%.

Banking stocks also advanced after the Nikkei reported over the weekend that Japan�s top three lenders were expected to post a combined profit of around �2 trillion ($24.2 billion) for the year ended March 31, up 30% from the year-ago period.

Mitsubishi UFJ Financial Holdings Group Inc. JP:8306 MBFJF �jumped 3.4%, Mizuho Financial Group Inc. climbed 0.7% and Sumitomo Mitsui Financial Group Inc. JP:8316 SMFG �rose 1.7%.