Asia close: Chinese property bubble in focus

Regional benchmarks were mostly higher, tracking gains on Wall Street in the previous session on the back of reports that Deutsche Bank might be close to settling a long-running probe by the US Department of Justice and after upbeat data out of China over the weekend.

Japan's benchmark Topix advanced 0.60% or 7.94 points to close at 1,330.72, as the Nikkei-225 jumped 0.90% or 148.83 points to close at 16,598.67.

In parallel, Hong Kong's Hang Seng jumped 1.23% to 23,584.43 and Taiwan's TAIEX was 0.73% ahead by the close of trading at 9,324.20.

Casino operators on the former of those two bourses were among the best performers, with Galaxy Entertainment pacing gains on news that gambling revenues rose for a second straight month in September.

Shares in iPhone screen supplier AU Optronics were also in demand on the heels of a report pointing to increased orders from Apple.

Further afield, Sidney's All Ordinaries rose 0.72% or 39.69 points to 5,564.84 and India's Sensex another 1.35% to 28,243.29.

The official Chinese manufacturing sector purchasing managers' index published on 1 October printed at 50.4, unchanged from the prior month.

That PMI reading, economists at Morgan Stanley said, was "in-line" with other high-frequency indicators such as power coal and steel production, suggesting that the stabilisation in growth seen over the past few months was sustained in September.

To take note of, since Friday seven local Chinese governments had had tightened home buying rules in a bid to curb demand, analysts at Deutsche Bank pointed out.

On 30 September, Deutsche Bank's Zhiwei Zhang inked a report saying that the property bubble in the country would elicit a small positive effect on growth over the next three to six months, but provoke significant downside risk beyond then.

"If the surge in in home prices continues to spread to more cities despite the city-specific tightening measures, it could trigger more aggressive policy tightening on national mortgage rate or down-payments requirements," Morgan Stanley's Robin Xing and Jenny Zheng said in a research report sent to clients.

Acting as a backdrop, several media reports out over the weekend highlighted the large income disparities which were increasingly evident in China, which in part explained the rise of the so-called 'neo-Maoists'.

Chinese markets were closed on Monday in observance of the country's week-long 'Golden Week' celebrations, alongside those of South Korea and Malaysia.

Bank of Japan governor Haruhiko Kuroda on Monday reiterated the monetary authority still had ample room to ease monetary policy.

That came as the BoJ's latest Tankan index of large manufacturing companies' confidence came in at a reading of +6.0 for September, unchanged from June's levels (consensus: +7.0).

US dollar/yen was little changed as of 1333 BST, trading at 101.36.

On the subject of Deutsche Bank, on 30 September analysts at JP Morgan pointed out the recent spike in euro area banks' demand for US dollar funding - to $6.35bn - at the European Central Bank's last auction, "raising fears about funding".

"We need to wait for next week to see if this elevated dollar borrowing by euro area banks persists beyond quarter-end," they said.