China shares end up nearly 5% after late-day spike

An investor looks on at a stock exchange hall in Shanghai, China.
ChinaFotoPress via Getty Images
An investor looks on at a stock exchange hall in Shanghai, China.

Asian shares advanced on Wednesday, with markets in China spiking in the final minutes of trade, as the morale of investors got a boost from suspected intervention from Beijing and an overnight rally on Wall Street.

Major U.S. averages rallied more than 1 percent each on Tuesday, as investors eyed some of the final data reports leading into the Federal Reserve's highly-anticipated two-day meeting that kicks off later in the global day. Analysts remain divided on whether the U.S. central bank will this week lift short-term interest rates for the first time in nine years.

Read MoreHow fast will the Fed hike rates? Heller weighs in

"[The] conditions are right for a move and we believe the Fed will raise rates by 25 basis points on September 17," Zal Devitre, head of investments at Citibank Singapore, told CNBC's "Street Signs Asia."

"We need to look at the core mandates of the Fed, which is to ensure full employment, price stability and gentle price inflation [and] we think those have been achieved," Devitre added.

By contrast, Keith Fitz-Gerald, chief investment strategist at Moneymorning.com, feels that a tightening in the U.S. monetary policy will "upset global markets" and the move will be "unbelievably irresponsible."

Symbol
Name
Price
 
Change
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NIKKEI
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HSI
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ASX 200
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SHANGHAI
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KOSPI
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CNBC 100
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China stocks light up

China's Shanghai Composite index powered up in the final hour of trading to finish 4.9 percent higher, shaking off lackluster momentum from earlier in the day which saw the index fluctuate between modest gains and losses.

According to Reuters, the late-day swing marked the bourse's best one-day gain since August 27, with over 1,000 stocks closing up by the daily maximum allowable of 10 percent.

The CSI300 Index — which tracks the largest listed companies in Shanghai and Shenzhen — rocketed 5 percent, with majority of the gains attained in the final 15 minutes before the market close at 3pm local time. Among the small-cap indexes, the Shenzhen Composite and and the start-up board ChiNext widened gains to more than 6 percent each, recovering from the steep selloff in previous sessions.

Analysts who spoke to CNBC said the late-day swing followed the familiar pattern in mainland markets which is typically likened to government intervention.

"While there is no specific evidence, it follows the pattern involving state-backed buying which sees the markets surging around 1 or 2pm local time," Daniel So, strategist at CMB International Securities, told CNBC by phone.

IG market strategist Bernard Aw agreed: "It is quite likely and quite suspicious that it is state buying [because] it cant be that investors decided to start buying in the last hour."

Aw added that authorities have begun "staggering their buying so as not to create a moral hazard."

"They don't do it everyday now. The China Securities Regulatory Commission (CSRC) came in almost everyday in July, but I guess they are starting to realize that investors may be trying to game the system so they started to stagger. Other reasons may be that it is getting too costly to support the market," Aw told CNBC by phone.

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Among gainers, property heavyweights such as Poly Real Estate and China Vanke closed up 4.9 and 3.2 percent respectively, while brokerage houses such as Haitong Securities shot up 8.4 percent, unaffected by local media reports that the president and two other executives of Citic Securities are under police investigation for suspected insider trading and leaking information.

The Hong Kong-listed shares of Citic closed down 0.7 percent in choppy trade, while its A-shares rose 7 percent. Following the news reports, Jefferies cut its price target for the stock to HK$26.50 with a 'buy' rating.

"[The stock reaction] is strange because fundamentally it is not a good news. We don't know whether there would be more brokers involved in investigations later, just like Citic Securities, so [this uncertainty] won't be good for securities stocks," CMB International Securities' So said.

Read MoreHayman Capital's Bass: China's real problem is its bankingsector

Nikkei gains 0.8%

Japan's benchmark Nikkei 225 index followed its U.S. counterparts higher on Wednesday.

Export-oriented stocks attracted hefty buy orders; Honda led advances in the sector, up 3.5 percent, while Toyota Motor, Nissan and Suzuki Motor elevated between 1.6 and 2.7 percent. Panasonic and Sony rose 3.4 and 1.2 percent respectively.

Banking stocks also gained ground; Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group closed up over 1 percent each.

Orix Corp climbed 2.5 percent on the back of a report by the Nikkei business daily that it is acquiring an 85 percent stake in Sinar Mitra Sepadan Finance.

ASX up 1.6%

Broad-based gains across all key sectors helped Australia's key S&P ASX 200 index to recover from Tuesday's one-week closing low.

According to a note by Patersons Securities, expectations for a delay in the Fed's policy tightening timeline lifted risk appetite. "After the U.S. markets lifted 1.28 percent last night on expectations that the FOMC will not lift rates in September, the U.S. futures market has lowered the probability of an U.S. interest rate hike in September to 28 percent, and for good reason," analysts wrote.

"A quick glance at the global and U.S. numbers suggests an interest rate lift is not necessary and quite risky," Patersons Securities added.

All four major lenders closed up over 2 percent each, while market bellwether BHP Billiton made gains of 2.3 percent, mirroring the 2.1 percent jump in the miner's U.S. ADRs overnight. Rivals Rio Tinto and Fortescue Metals surged 1.1 and 2 percent respectively.

Woodside Petroleum moved up 3 percent following a report by the Sydney Morning Herald that its chief executive Peter Coleman will hold talks with the Papua New Guinea government to consider whether to sweeten a $11.6 billion takeover bid that was rejected by Oil Search earlier this week. Shares of the latter widened gains to 2.2 percent.

Meanwhile, media companies rallied for a second straight day on hopes of media deregulation under new Prime Minister Malcolm Turnbull. Ten Network, Nine Entertainment and Seven West Media rose nearly 3 percent each.

Kospi leaps 2%

South Korea's Kospi index finished at a one-month high, with securities, technology and oil-related plays leading the charge.

According to Reuters, foreign buying was a key factor in the strong rally. Foreigners purchased a net 217.6 billion won ($185.04 million) shares in the main board, snapping a 29-session selling spree. Meanwhile, a raise in South Korea's sovereign currency rating to AA-minus from A-plus by Standard & Poor's also supported sentiment.

Chipmaker SK Hynix led gains in the tech sector with a rise of 4.5 percent, while the index's top weighted stock Samsung Electronics widened gains to 2.6 percent. Daewoo Securities soared 5.7 percent, while Samsung Securities and Hyundai Securities advanced 3.9 and 2.9 percent respectively.

Samsung Heavy Industries and Samsung Engineering Co. leaped 11.3 and 18.6 percent respectively, on heightened expectations for a merger.

Read MoreSouth Korea takes stab at slaying zombie company menace

SET adds 0.8%

Thailand's benchmark SET index edged up to close 0.8 percent higher after the Bank of Thailand left its benchmark one-day repurchase rate unchanged at 1.50 percent for a third straight meeting, in line with expectations.