Asia Markets

Hang Seng hits 7-year high; Nikkei just below 20,000 mark

Shares in Hong Kong and Tokyo outperformed the region to scale fresh multi-year highs on Thursday.

U.S. stocks closed higher on Wednesday as the mostly dovish minutes from the last Federal Reserve meeting helped markets overcome the impact of plunging energy prices. The tech-heavy Nasdaq outperformed the other major indices, closing up 0.8 percent. The Dow Jones Industrial Average finished up 0.2 percent, while the S&P 500 settled 0.3 percent higher.

Mainland stocks mixed

China's Shanghai Composite index fell nearly 1 percent, while Hong Kong shares continued its blistering rally, surging nearly 3 percent for the day to hit seven-year highs. Meanwhile, the Hang Seng China Enterprises Index of Hong Kong-listed mainland companies soared 2.6 percent.

The rally was boosted by strong buying from Chinese investors who used up the entire 10.5 billion yuan ($1.69 billion) daily investment quota in the Shanghai-Hong Kong stock connect for the second straight session.

Analysts say investors are seeking arbitrage profits from the massive valuation gap between Hong Kong and Shanghai shares in the same companies. Cheap valuations after a "five-year bear market" also contributed to the upswing, according to John Hetherington, regional deputy head of Asia Pacific Research, Daiwa Capital Markets.

"There is no doubt that money flows originating from China are helping [but] after a five-year bear market in Hong Kong, there's now a lot of [chatter] about how this market is finally starting to move [and as] valuations get off a low base, you get that extreme movement," he told CNBC Asia's "Squawk Box."

Brokerage houses were among the top performers on the Hang Seng index; China Galaxy Securities rocketed 13 percent, while Haitong Securities and Citic Securities climbed 7.8 and 2.5 percent, respectively. Actively traded stocks for the day include CCT Land and Gome, which were up more than 40 percent each.

Be careful with Hong Kong stocks: Daiwa

Nikkei gains 0.8%

Japan's Nikkei 225 clinched a second multi-year closing high, ending the day at its highest level since June 2000 and in sight of the 20,000 milestone. The dollar-yen back above the 120 handle helped sentiment.

"USD/JPY is underpinning gains for the Nikkei, which is flirting with the 20,000 barrier. The last time the Nikkei was trading above 20,000 was back in April 2000 and needless to say, a break of this level will represent a significant psychological feat," Stan Shamu, IG's market strategist, wrote in a note.

Helping to prop up the bourse were exporter stocks; Sony notched up 2.7 percent, while Nissan Motor jumped over 4 percent after SMBC Nikko Securities hiked its rating to "outperform" from "neutral" citing likely strong sales.

Heavyweights like Fast Retailing and Fanuc also swung up 1.9 and 1.1 percent, respectively.

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Kospi flat

South Korea's Kospi index closed flat after touching a more than 5-month high earlier in the session, as the Bank of Korea (BOK) kept interest rates steady at 1.75 percent as expected.

Index heavyweights were lackluster across the board; Posco and KB Financial Group slumped 1 and 2.5 percent each, while Samsung Electronics settled 0.3 percent higher in choppy trade.

After announcing plans of a merger on Wednesday, shares of Hyundai Steel and sister company Hyundai Hysco fell nearly 2 percent each.

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ASX sheds 0.5%

Australia's S&P ASX 200 index fell as a weak outlook for commodity prices took a toll on its resources sector.

Oil-related counters trimmed losses after U.S. crude oil futures clawed back some losses in early Asian trade. Woodside Petroleum plunged 2.7 percent, while Santos and Oil Search receded 0.5 and 0.3 percent each.

Market bellwether BHP Billiton fell 1.8 percent, tracking losses in its U.S. ADRs overnight. Other iron ore miners such as Fortescue Metals and Rio Tinto lost 2.6 and 0.7 percent, respectively.

Rest of Asia

India's Nifty index closed up 0.7 percent after Moody's ratings revised the country's sovereign rating outlook to "positive" from "stable" on Thursday.

In Singapore, Noble Group plummeted 7.7 percent to its lowest level since September 2010 after investment research firm Muddy Waters said on Thursday it had a short position on the commodity trader. The stock has been battered over the past month following a slew of critical reports about the firm's accounting practices by Iceberg Research.