Hong Kong and mainland stocks closed higher on Wednesday, as investors snapped up rare earth and metal shares amid simmering geopolitical tensions.

The benchmark Hang Seng Index ended up 175 points, or 0.66 percent, at 26,765 in Hong Kong.

The China enterprises index was up close to 27 points, or 0.3 percent, at 9,034 but the tech index was down 10 points, or 0.19 percent, at 5,260.

On the mainland, the benchmark Shanghai Composite Index ended up close to 30 points, or 0.72 percent, at 4,147.

The Shenzhen Component Index was 184 points, or 1.29 percent, higher at 14,475 while the ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, was 46 points, or 1.41 percent, up at 3,354.

In Tokyo, the Nikkei share average climbed to another record, driven by a surge in tech-related stocks and waning expectations of an ⁠imminent policy rate hike after new central bank board member nominations.

The benchmark Nikkei 225 index rose 1,262 points, or 2.2 percent, to close at 58,583 after rising up to 2.7 percent earlier. The broader Topix gained 0.7 percent at 3,843.16.

The rally came after China prohibited the export of dual-use items to 20 Japanese entities that it says supply Japan's military. The rules effectively cut companies off from the seven rare earths ⁠and associated materials currently on China's dual-use control list.

⁠Meanwhile, Reuters reported that ⁠the Trump administration planned to use a Pentagon-created artificial intelligence programme to help set reference prices for critical ⁠minerals.

Non-ferrous metal shares ‌climbed 3.8 percent, while materials shares outperformed offshore, up 2.7 percent.

"Despite the year-to-date weakness in internet stocks causing significant losses, investors believe concerns ⁠over the AI-fear trade are exaggerated for the China market," UBS analysts said in a note to clients.

"Consequently, investors are reallocating funds to less crowded sectors like ‌oil services, coal, lithium, and insurance names."

Hong Kong-listed Alibaba and Tencent fell 10 percent and 12 percent, respectively, over the past month, while onshore artificial intelligence shares lost nearly 4 percent.

Onshore consumer staple and ⁠real estate shares ‌rose 0.6 percent and 2.2 percent, respectively.

Goldman Sachs ‌analysts said data from the Lunar New Year period pointed to a solid demand backdrop, ‌with consumers still willing to spend during the festival, broadly matching slightly higher market expectations.

They, however, cautioned that a typical post-holiday slowdown and a longer break ⁠that might have flattered the figures made the subsequent trend crucial to monitor. (Reuters & Xinhua)



Edited by Thomas McAlinden