Asian stocks rise as ECB bank stress tests ease Europe concerns
By Bloomberg
Asian stocks rose, after the benchmark gauge capped its first weekly gain in seven weeks, amid optimism about the financial strength of European banks. Hong Kong shares slid on a delay to the city's bourse link with Shanghai.
The MSCI Asia Pacific Index gained 0.5 percent to 138.25 as of 4:06 p.m. in Hong Kong. The gauge last week surged 2.9 percent after U.S. earnings beat estimates and a measure of European manufacturing unexpectedly showed expansion this month. The Hang Seng Index dropped 0.7 percent today, with Hong Kong Exchanges & Clearing Ltd. leading declines, after the head of the bourse said he didn't know when a stock-trading program between the city and Shanghai will start.
None of Europe's largest banks were found lacking in the European Central Bank study. Smaller lenders found to be deficient now have as many as nine months to fill gaps identified by the ECB, which is aiming to close the door on half a decade of financial turmoil in the euro region.
"Most people expect markets to grind out some further gains," Donald Williams, a Sydney-based chief investment officer who helps oversee about A$1.6 billion ($1.4 billion) at Platypus Asset Management Ltd., said by phone. "The authorities in Europe have chucked so much at the problem and will continue to flood the market with liquidity. The major issue of Europe of the past few years is old news now."
Nine of 10 industry groups on the MSCI Asia Pacific Index advanced today after the gauge capped its first weekly advance since Sept. 5. The Topix index rose 1 percent, with Tokyo Electric Power Co., operator of the stricken Fukushima Dai Ichi nuclear plant, jumping 17 percent after the Nikkei newspaper said the company will report a profit.
Australia, Korea
Australia's S&P/ASX 200 Index gained 0.9 percent. South Korea's Kospi index advanced 0.3 percent. Markets in New Zealand were closed for a holiday. Futures on the Standard & Poor's 500 Index added 0.1 percent after the underlying gauge surged 4.1 percent last week.
About 79 percent of S&P 500 companies that have reported quarterly earnings this season have topped analysts' estimates for profit, while 61 percent beat sales projections, data compiled by Bloomberg show. Caterpillar Inc. and Yahoo! Inc. surged last week after posting better-than-expected results.
HKEx slumped 4.7 percent to HK$166.20 on volume that was 244 percent higher than the three-month average. After six months of preparation for a Shanghai stock-link start date that regulators indicated would be this month, brokerages are still in the dark about when it will begin.
Delay Impact
Further delays risk curbing participation in a program that will give foreigners unprecedented access to China's $4 trillion stock market, according to Andy Maynard, global head of trading and execution at CLSA Ltd.
China's economic growth will slow to 7.3 percent in 2015, Song Guoqing, an academic member of the monetary policy advisory committee for the People's Bank of China, said at a forum in Beijing on Oct. 25. That view contrasts with a prediction by Fan Jianping, chief economist at a state research institute, for 7 percent growth next year unless the central government imposes stronger-than-expected stimulus measures.