Asian Stocks Sees Gains in Hopes of China's Recovery Efforts

Bonds saw a reprieve from recent selling as Asian stocks firmed on Feb 7 as investors watched to see if Beijing's increasingly desperate attempts to prop up its collapsing share markets would actually work. China's authorities have recently declared more restrictions on short sales, and state investors have stated that they are increasing their stock purchase plans.

Additionally, Bloomberg News said that President Xi Jinping would speak with financial regulators about the stock market; however, neither the event nor the content of the discussion were verified. Still, it remains to be seen how useful all of this will be. In choppy early trade, the blue chip index increased by 0.2%, while Shanghai stocks gained 0.1%.

"Markets have shown that their bar to turning more optimistic around the economy has been high," said Galvin Chia, emerging markets strategist at NatWest. "There is also considerable uncertainty around what the government's longer-term approach is towards markets."

"What I am wary of is a short term bounce gets quickly unwound after onshore markets return after the Lunar New Year break."

A 1.8% increase in South Korea helped MSCI's broadest index of Asia-Pacific shares outside of Japan rise 0.7% to a five-week high. The Nikkei of Japan fell 0.1%, but it was still off its early lows.