Hong Kong shares held above their 200-day moving average, while banks and energy-related counters helped China's benchmark index rise for a second session although weak turnover in both markets suggested investor conviction remained low. The Hang Seng Index rose 0.5 percent, still holding above a chart level that has provided good support over the past two months. The China Enterprises Index outperformed, rising 1.1 percent, helped by gains in financials and another day of strength in coal plays.
The Shanghai Composite Index ended up 0.7 percent at 2,873.5, led by the heavily weighted energy and financial plays. The index has moved within a narrow 30-point range over the past five sessions as market players have shied away from making big bets and remain wary of persistent high inflation in China.
Turnover remained tepid with Shanghai's the lowest since February while Hong Kong saw another day of sluggish activity with less than a third of the benchmark constituents hitting their average 30-day traded volumes. While banking shares rose on light volumes, Chinese coal plays continued to power ahead.
A supply shortage and expectations of an electricity crunch on the mainland as well as attractive valuations are buoying coal miners. China Shenhua Energy Co Ltd, China's largest coal producer, which trades at a 10 percent discount to its five-year median forward 12-month price-to-earnings multiple according to Thomson Reuters data, rose 1.7 percent in Hong Kong. China Coal Energy Co Ltd rose 2.1 percent in Hong Kong.
Lawrence Lau, an analyst with Bank Of China International in Hong Kong, said in a note that Shenhua's strong output growth in April continued to support his "buy" rating. Shenhua reported a 25.4 percent jump in output for last month. Of the 28 analysts covering the counter, none have a "sell" rating, according to Thomson Reuters Starmine.
An over-1 percent rise in crude oil prices on the back of a weaker dollar lifted shares of China's large oil producers up from technically oversold levels on the charts. CNOOC Ltd rose 1.5 percent.
Financials were the biggest boost on the Shanghai market with Industrial & Commercial Bank of China Ltd up 1.1 percent and China Merchants Bank Co Ltd rising 2.1 percent. The Shanghai Composite has moved within a narrow 30-point range over the past five sessions as market players have shied away from making big bets. Turnover hit a four-month low on Wednesday. One stock that bucked the weak volume trends was China's top liquor maker, Kweichow Moutai Co Ltd.
Kweichow Moutai, principally engaged in the manufacture and distribution of Moutai liquor series products seen as a status symbol on the mainland, has gained more than 8 percent this quarter so far, bucking the broad market decline of the last two weeks brought on in part by the global commodities sell-off.
"Moutai is highly regarded by investors because it is perceived to offer some certainty in this uncertain, volatile market," said Liu Jin-Hu, an analyst with Sealand Securities in Shenzhen who was one of at least four analysts who assigned a buy rating to the stock in the last month.