Asian Stocks Rise as Hong Kong Shares Climb, Bank Concerns Ease

  • Hang Seng Index jumps as casino shares rally on Macau data
  • Markets in China, Malaysia, Korea shut for holidays on Monday

Asian stocks rose, with the regional benchmark index rebounding from a one week low, as worries over the health of European banks eased and casinos led a rally in Hong Kong shares.

The MSCI Asia Pacific Index gained 0.7 percent to 140.68 as of 4:11 p.m. in Hong Kong. Japan’s Topix index rose 0.6 percent as the yen traded at 101.41 against the U.S. dollar, weakening for a fifth straight session. Relief swept over equity markets on Friday as Agence France-Presse reported Deutsche Bank AG is near a $5.4 billion deal with the U.S. Department of Justice, less than half the initial amount requested to settle a probe related to bad mortgages.

“We’re seeing a relief rally after AFP reported that the Deutsche settlement could be lower,” Hans Goetti, the Dubai-based chief strategist for the Middle East and Asia at Banque Internationale à Luxembourg, which manages $40 billion, said by phone. “I’m not so sure whether we’re out of the woods on that but then the worst-case scenario is for the German government to take a stake in the bank. There’s no way the bank will go under.”

Hong Kong’s Hang Seng Index rose 1.2 percent as better-than-expected Macau gambling numbers lifted casino operators. In other data, China’s official factory gauge stayed at the highest level in almost two years for a second month and services increased, the National Bureau of Statistics said on Oct. 1. in Hong Kong, the latest evidence of continued economic stabilization.

Regional Gauges

Taiwan’s Taiex climbed 0.7 percent. New Zealand’s S&P/NZX 50 Index added 0.2 percent, erasing losses of as much as 0.4 percent. The Jakarta Composite Index jumped 1.7 percent, trading near the highest level since April 2015, while India’s S&P BSE Sensex index advanced 1.2 percent. The Philippine Stock Exchange Index added 0.6 percent, and Thailand’s SET Index gained 0.5 percent. Singapore’s Straits Times Index increased 0.1 percent.

Markets in Malaysia and South Korea are shut for holidays on Monday, while those in China are closed for the entire week. Australia was open but there was no settlement because of a holiday in some states.

Japan’s quarterly Tankan gauge of business sentiment showed large manufacturers remained more downbeat than expected about business conditions over the past quarter, likely making it more challenging for the central bank to stoke inflation and revitalize the economy.

‘Far from Over’

Concerns about Deutsche Bank’s potential impact on the global economy as it struggles with tougher capital standards and soaring legal bills have buffeted markets. The bank was dealt a fresh blow on Saturday when an Italian court charged the company, an employee and five former executives for colluding with Banca Monte dei Paschi di Siena SpA to falsify the Italian lender’s accounts in 2008. The lender is also poised to reach an agreement with labor representatives this week to cut about 1,000 jobs, people with knowledge of the matter told Bloomberg News.

“Concern about Deutsche Bank is far from over,” Nicholas Teo, a strategist at KGI Fraser Securities in Singapore, said by phone. “Systemic risk is a real possibility with the derivatives exposure that plagues Deutsche.”

Galaxy Entertainment Group Ltd. climbed 2.9 percent in Hong Kong, pacing gains among casino operators, as Macau gambling revenue increased for a second month in September following an over two-year slump. AU Optronics Corp. jumped 5.7 percent in Taipei after a report the supplier of screens to Apple Inc. is seeing increased orders. Keppel Corp. fell 2 percent in Singapore after the world’s biggest oil-rig builder acknowledged certain transactions linked to its former third-party commercial representative in Brazil may be suspicious.

Futures on the S&P 500 Index were little changed. The underlying U.S. equity benchmark measure gained 0.8 percent on Friday, with the Dow Jones Industrial Average rising more than 160 points.

— With assistance by Emma O'Brien

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