Asian Stocks Swing on U.S. Budget Stalemate, Japan Tankan

Asian stocks swung between gains and

losses as investors awaited a potential shutdown of the U.S.

government and after a report showed confidence among large

Japanese manufacturers increased before Prime Minister Shinzo

Abe unveils plans for an economic-support package.

The MSCI Asia Pacific Index fell 0.1 percent to 138.40 as

of 9:39 a.m. in Tokyo, having swung between a again of 0.1

percent and a loss of 0.2 percent. Just hours before a midnight

deadline to keep the U.S. government open, President Barack

Obama urged lawmakers to pass a funding bill not tied to his

health-care legislation for the sake of the economy. Even if

Congress resolves the budget fight by the midnight deadline,

U.S. lawmakers would move to the next fiscal dispute over

raising the $16.7 trillion debt ceiling.

“Even if politicians do allow a U.S. government shutdown,

it will only be temporary,” Angus Gluskie, chief investment

officer who helps oversee about $500 million at White Funds

Management in Sydney, said by telephone. “People want this

issue resolved. Economic data in Asia has been better. That’s

giving investors some amount of optimism.”

Japan’s Topix index advanced 0.2 percent. The nation’s

jobless rate rose to 4.1 percent in August, while the Bank of

Japan’s quarterly Tankan survey of sentiment among large

manufacturers beat estimates. Prime Minister Abe may announce

today a 6 trillion ($61 billion) economic package that includes

tax cuts, according to Kyodo News Agency.

Regional Gauges

South Korea’s Kospi index gained 0.3 percent. New Zealand’s

NZX 50 Index lost 0.2 percent and Australia’s SP/ASX 200 Index

decreased 0.3 percent. Financial markets in Hong Kong and China

are closed today.

China’s official gauge of manufacturing, the Purchasing

Managers’ Index, may deliver a reading of 51.6 for September, up

from 51 in August, according to the median estimate in a

Bloomberg survey of 30 economists. Fifty is the threshold

between expansion and contraction. A HSBC Holdings Plc and

Markit Economics PMI rose to 50.2, from 50.1 in August, below a

preliminary estimate of 51.2, according to data released

yesterday.

Chinese Premier Li Keqiang said in a speech yesterday that

the world’s second-largest economy can meet its main targets for

this year. The economy is “stabilizing in a good trend” Li

said, as cited by China National Radio. The economy probably

grew 7.7 percent in the third quarter, according to the median

forecast in a Bloomberg survey last month, up from an estimate

of 7.5 percent in August.

Relative Value

The MSCI Asia Pacific Index advanced 6.4 percent in

September, pushing valuations on the regional gauge to 13.5

times estimated earnings from 12.7 in August, according to data

compiled by Bloomberg. That compares with 15.3 for the Standard

Poor’s 500 Index and 14.2 for the Stoxx Europe 600 Index, the

data show.

Futures on the SP 500 Index added 0.2 percent today. The

gauge declined 0.6 percent yesterday as a stalemate over the
federal budget sent the government toward a potential shutdown

at midnight.

“Politicians seem to believe that there’s political

capital to be gained from causing the government to shut down,

and that they’ll be able to gain more when it comes to the debt-ceiling debate,” John Baur, Boston-based portfolio manager at

Eaton Vance Management, which oversees $261 billion globally,

said in an interview in Singapore. “The debt-ceiling debate is

the real deal that we need to be worried about.”

Republicans and Democrats remained at odds over whether to

tie any changes to the 2010 Affordable Care Act to a short-term

extension of government funding as the shutdown deadline

approached. The Senate voted 54-46 yesterday to reject the House

of Representative’s latest plan, in a party-line move that puts

the pressure back on House Republicans.

Senate Republicans floated the idea to extend by one week

the funding deadline to avert a shutdown. Senate Majority Leader
Harry Reid said no. Democrats urged House Speaker John Boehner

to allow a vote on a spending bill without conditions.

To contact the reporter on this story:

Jonathan Burgos in Singapore at

jburgos4@bloomberg.net

To contact the editor responsible for this story:

Sarah McDonald at

smcdonald23@bloomberg.net

Asian Stocks Swing on U.S. Budget Stalemate, Japan Tankan