The market will be supported by comments from China Premier Wen Jiabao in state media on Monday that the world's second-largest economy will start to fine-tune its economic policies in the first quarter, the most explicit indication yet
of further monetary policy easing.
A slew of economic data last week betrayed signs of spluttering domestic demand in the mainland. Imports crumbling to their lowest in more than two years and weaker-than-forecast bank lending signalled to investors that policymakers would soon make a fresh bid to bolster growth.
There were already signs of some policy support on Monday. Chinese banks could come into focus after the Financial Times reported that Beijing has instructed them to embark on a huge roll-over of loans to local governments, aiming to give itself more time to deal with a debt hangover from the global
financial crisis.
China's third-tier city of Wuhu, in eastern Anhui province, has suspended a plan to ease property control restrictions, the Shanghai Securities News reported on Monday.
On Friday, the Hang Seng Index fell 1.1 percent to 20,783.9 points, retreating from resistance at its 250-day moving average at about 21,012. A quick move above this level in good volume could sustain further near-term gains.
The Hang Seng Index has not finished above this technical level, which has capped the benchmark since early July last year.
While this is currently seen at around 21,012, 21,017 is also the bottom of a 708-point gap that opened up between Aug. 4 and 5, further explaining the formidable resistance at current levels.
Short selling accounted for 7.7 percent of total turnover on the Hong Kong bourse on Friday. Short interest averaged about 7.6 percent last week in the highest weekly turnover in 2012 to date, compared to 8.9 percent the week before.
Elsewhere in Asia, Japan's benchmark Nikkei was up 0.3 percent at 8,974.6 points, while the Korea Composite Stock Price Index (KOSPI) was up 0.1 percent at 1,995.1 points at 0048 GMT.
FACTORS TO WATCH:
* The world's top aluminium producer, Russia's United Company RUSAL Plc , said on Monday that it may cut aluminium output by 6 percent in the next 18 months.
* Minmetals Resources said on Friday its acquisition of Anvil Mining will proceed now that the two firms have reached an agreement with minority stakeholders in the Democratic Republic of Congo.
* China Yurun Food Group Ltd said on Friday it expected net profit for its 2011 financial year to fall by about 38 percent from a year earlier, due to rising raw material costs and negative media reports. The Chinese meat processer said its
business environment in the fourth quarter was hit by bad publicity.
* Shopping centre developer CapitaMalls Asia said more than half of its malls in China would be up and running in 2012, marking an "inflection point"
for the company, which has been investing heavily to develop the projects.
* Geely Automobile Holdings Ltd, a homegrown Chinese private car maker, said on Friday its January auto sales fell 16.5 percent from the same month last year to 38,100 cars.
* China's Sinopec Corp has agreed to increase Saudi crude oil imports under a 2012 term contract from last year's 800,000 barrels per day, Chinese industry officials told Reuters.
* Ajisen (China) Holdings Ltd said it expected its 2011 profit to decline 20-30 percent from a year ago period due mainly to decrease in revenue brought by concerns over its products raised by some media reports around the third quarter
of 2011
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