Japanese stocks led gains in Asia on Wednesday, racing to fresh highs on growing optimism over more fiscal stimulus from Tokyo.
Chinese stocks reversed early gains after Beijing altered a key margin financing policy to make it more difficult to buy shares on credit.
The move largely offset gains in chipmaking stocks and positive cues from upbeat December trade data.
Broader Asian markets were muted as a tech-fueled rally in South Korea cooled. Regional stocks also took negative cues from Wall Street, which fell from record highs overnight on a rout in bank shares.
S&P 500 Futures fell 0.2% by 00:38 ET (05:38 GMT). Focus is on more bank earnings due on Wednesday and Thursday, while U.S. producer inflation data is also on tap.
Japan’s Nikkei, TOPIX hit record highs on snap election speculation
Japan’s Nikkei 225 jumped 1.6% to a record high of 54,522.0 points, while the TOPIX rose over 1% to a peak of 3,641.50 points. Both indexes extended sharp gains from the prior session.
Japanese stocks rallied as a host of reports suggested that Prime Minister Sanae Takaichi planned to dissolve parliament’s lower house and set the stage for a snap election as soon as early-February.
Speculation over a snap election fueled bets that Takaichi, who has maintained her popularity in Japan, will gain a greater foothold in parliament, allowing her government to dole out even more fiscal stimulus.
This notion pushed the yen to its weakest point in nearly two years, which in turn benefited export-heavy Japanese stocks.
But analysts warned that Takaichi’s policies could further undermine Japan’s fiscal health. An early snap election could also delay parliamentary approval of a bill that allows the government to issue deficit-covering bonds.
China stocks reverse gains on margin financing ratio hike
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes shed about 0.2% apiece, falling from multi-year peaks after rising more than 1% earlier in the day.
Hong Kong’s Hang Seng index curbed gains to trade up 0.3%, amid continued strength in local tech names.
Chinese shares reversed course after Beijing raised the minimum margin required for funding stock purchases in local exchanges to 100%.
Investors are now required to provide margin equal to the full value of the securities they intend to buy on credit, with the move largely aimed at curbing overspeculation and limiting risk.
But the move now increases the cost of speculating in Chinese markets, which sapped local shares of their recent momentum.
Chinese shares rose earlier in the day after data showed China’s trade surplus grew to a record $1.25 trillion in 2025. A sharp increase in December imports also drummed up hopes over a recovery in local demand.
Chinese tech stocks remained upbeat after a slew of bumper initial public offerings in the sector over the past week. Two of China’s so-called “AI tigers,” MiniMax Group Inc (HK:0100) and Zhipu (listed as Knowledge Atlas (HK:2513)) went public to strong investor interest last week.
Zhipu rallied as much as 17% on Wednesday after it released a new AI model that claimed to be trained entirely on Chinese-made chips developed by Huawei.
Chinese chip stocks also rose on the news, given that it marks more progress for Beijing’s complete self-reliance in AI.
The sector was non-plussed by Nvidia (NASDAQ:NVDA)being allowed to sell its H200 chip in China, after a report said Beijing planned to severely limit domestic sales of the chip.
Asian chipmaking stocks were also largely upbeat ahead of closely watched fourth-quarter earnings from TSMC (NYSE:TSM) (TW:2330), which is widely regarded as a bellwether for the sector.
TSMC will report its Q4 earnings on Thursday afternoon.
Broader Asian stocks moved in a flat-to-low range. South Korea’s KOSPI rose 0.3%, reversing mild intraday losses.
Australia’s ASX 200 and Singapore’s Straits Times indexes were flat.
India’s Nifty 50 index edged lower, having largely lagged its global peers on growing concerns over higher U.S. trade tariffs against New Delhi.
Source: Investing