South Korea and Japan were the best performers for the quarter, as optimism over artificial intelligence drove outsized gains in tech shares

Most Asian stocks rose on Tuesday, with Chinese markets buoyed by stronger-than-expected business activity data, while strong gains in technology shares put bourses on track for a stellar second quarter.

South Korea and Japan were the best performers for the quarter, as optimism over artificial intelligence drove outsized gains in tech shares.

Shanghai Shenzhen CSI 300 rose over 1.1%, while the Shanghai Composite gained 0.5%.

The bluechip index was trading up over 10% in the second quarter.

China’s official manufacturing PMI unexpectedly returned to expansion territory in June at 50.3, while the non-manufacturing PMI added to 50.2 and the composite gauge jumped to 50.6, indicating the economy continued to benefit from resilient high-tech exports.

The print indicated that exports continued to be the biggest drivers of China’s economy, helping offset sustained weakness in demand.

ING analysts said while Tuesday’s data showed some strength, it still heralded a potential slowdown in second-quarter economic growth.

This trend was likely to elicit more stimulus measures from Beijing in the coming months, ING analysts said.

Tuesday marks the final trading day of the second quarter, with equities poised to cap one of their strongest quarters in years as an artificial intelligence-driven rally in semiconductor stocks powered gains across some markets.

Nikkei 225 rose more than 1% and remained on track for a quarterly gain of more than 36%, while KOSPI added 1% and was still set for an almost 65% jump during the quarter after hitting a series of record highs.

The MSCI Asia ex Japan Net USD jumped nearly 21% over the past three months, led by South Korea, now the world’s best-performing major equity market this year.

But some Asian markets lagged in the quarter. Hang Seng dropped over 1% on Tuesday and was set to lose 7.5% in the quarter.

ASX 200 advanced 0.5%. Minutes from the Reserve Bank of Australia’s June meeting reaffirmed that policymakers remained cautious on inflation and were prepared to hike interest rates further after an aggressive hiking cycle this year.

TOPIX index added 0.3% after data showed industrial production rose less than expected in May while unemployment remained steady.

Jakarta Stock Exchange Composite Index declined nearly 1.9%, extending its underperformance as foreign investors continued to pull money from the market amid lingering concerns over policy credibility, market transparency and a potential MSCI downgrade, leaving the benchmark the world’s worst-performing major equity index this year.

Investors also digested Philippine trade and inflation data, with oil price volatility remaining a key consideration for the economy, while Thailand’s industrial production figures pointed to continued softness in manufacturing activity.

SET Index was up 0.3%, while PSEi Composite shed 1.6%.