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Asia stocks rise amid AI hype

Asian stocks

Japanese stocks were the biggest gainers, with the Nikkei 225 soaring 1.2% to a new 34-year high, while the broader TOPIX gained 0.7% and also traded at its highest level since 1990

Most Asian stocks gained on Monday, with Japanese shares leading gains as hype over AI drove investors into tech, while Chinese markets continued to drop amid persistent concerns of a slowing economic recovery.

Regional stocks took a positive lead-in from Wall Street, after U.S. stock benchmarks hit record highs on Friday amid strong gains in the tech sector. Buying into tech was fuelled largely by hopes that increasing demand for AI development will drive renewed interest in the sector.

Japanese stocks were the biggest gainers of this notion, with the Nikkei 225 soaring 1.2% to a new 34-year high, while the broader TOPIX gained 0.7% and also traded at its highest level since 1990.

Yamaha Motor Co Ltd was the top performer on the Nikkei, soaring 5.4% after it announced a deal to buy electric motor maker Torqeedo from Germany’s Deutz AG – a sign that the legacy motorcycle manufacturer planned to push further into the electric vehicle market.

Wider strength in Japanese stocks was fuelled by growing conviction that the BoJ will largely maintain its ultra-dovish policy at the conclusion of a meeting on Tuesday.

A dovish Bank of Japan was a major point of support for Japanese markets, given that monetary conditions in the country remained ultra-loose even as most other major central banks began raising rates over the last two years.

Major Japanese tech stocks- especially those with exposure to the chipmaking sector- also clocked strong gains. Advantest Corp. and Tokyo Electron gained 3% and 1%, respectively.

Wider Asian markets rose on Monday, buoyed chiefly by tech gains after TSMC – the world’s biggest contract chipmaker- offered a positive outlook for 2024 on the back of AI-fuelled demand.

Positive comments from the company had sparked strong gains in global chipmaking stocks last week- gains which were extended into Monday.

South Korean chipmaking majors Samsung Electronics Co Ltd and SK Hynix Inc gained more than 1% each, although the broader KOSPI index was flat.

Gains in the tech sector helped Australia’s ASX 200 add 0.5% despite weakness in major mining stocks. Rare earths miner Lynas Rare Earths Ltd dipped 1.8% after it clocked a more than 50% drop in quarterly revenue on sluggish Chinese demand.

Chinese stocks remained an exception among their Asian peers, trading in a flat-to-low range on Monday amid continued concerns over a slowing economic recovery in the country.

The blue-chip Shanghai Shenzhen CSI 300 index gained 0.2% from a near five-year low, while the Shanghai Composite dropped 0.5%. Losses in mainland stocks dragged Hong Kong’s Hang Seng index 1.4% lower to a new 15-month low.

Chinese stocks were the worst performers in Asia through 2023 as a post-COVID economic recovery largely failed to materialize. Recent data showing persistent weakness in the country saw them extend these losses into 2024.

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