A 2 percent rally in Japanese stocks led gains on Monday with exporters lifted by a weak yen, while Australian shares charged to a fresh four-and-a-half year high on strong corporate earnings.
The Nikkei's recent jump to 33-month highs solidifies its place as Asia's best performing stock market with a 26 percent rise over the past three months, compared to Shanghai's 17 percent and Australia's 16 percent increase.
However, some investors are warning the Japanese market is getting too hot. "The Nikkei is still at a historic P/E multiple of 30 times forward. Some people argue it's going to be 14 times on a price-to-book basis... I'm a skeptic and I don't see a substantive change in the corporate behavior of Japan," said Eddie Tam, CIO of Central Asset Investments.
Japanese finance minister Taro Aso spoke to CNBC, voicing his preference for a steady increase in stock prices.
Electronic equipment makers were amid the market's highest gainers, riding on the coattails of a weaker yen with plastics manufacturer DSM soaring over 11 percent.
Banking stocks were also key sector gainers with Shinsei Bank advancing 9.5 percent and Sumitomo Mitsui Trust Holdings up over 6 percent
Chinese financial markets were marginally lower as the market resumed trade after the Lunar New Year holiday.
Liquor makers took the brunt of selling after retail sales during the week-long holiday rose at the slowest pace in four years as state-owned firms cut down spending. Kweichow Moutai, the biggest maker of baijiu liquor, fell over 4 percent.
"More gains in Chinese shares is what I see for this year overall. Short term, I won't be surprised to see some pull-back because we've seen quite a bit of run-up on Chinese A-shares since December," remarked Chi Lo, Senior Strategist at BNP Paribas Investment Partners.
Hong Kong shares fell as investors were disappointed by underperformance in Chinese onshore markets, which reopened after the Lunar New Year holiday. Investors reacted to signs of softening on mainland exchanges, with Chinese insurers and banks performing weaker.
Seoul shares finished unchanged, dragged down by automakers on the back of a strong Korean won. Hyundai Motor lost 1.9 percent while Kia Motors was down over 2 percent.
In Australia, shares of Bluescope Steel led the earnings momentum. The steel producer closed over 15 percent after posting a smaller net loss in fiscal fist-half profit compared to a year ago.
Bendigo & Adelaide Bank finished up 3 percent after better-than-expected results but drilling service provider Boart Longyear slumped as much as 9 percent after the company reported a 58 percent fall in net profit and appointed a new chief executive and chairman.
As the Australian market enters a fifth consecutive week of gains, worries are slowly surfacing about a correction. "I do think though any pull-back we get will be lackluster and small in nature. I don't think we'll go below the 4,800 level. Looking at technicals, I think the market can rally up to the 5,289 level at the moment," said Steven Hogan, Private Client Advisor at Novus Capital.
Coming Up This Week:
TUESDAY: RBA minutes; Earnings from CC Amatil.
WEDNESDAY: Earnings from BHP Billiton, Fortescue; Japan Jan trade data, Bank of Thailand interest rates decision.
THURSDAY: Earnings from Alumina, ASX, IAG, Qantas, COSCO, Genting; China HSBC Flash PMI
FRIDAY: Taiwan Q4 GDP; Earnings from United Overseas Insurance, Wilmar.