Asia markets, banks, Europe, USA, bailouts

Former Reserve Bank of India Governor Raghuram Rajan believes it is still too early to say whether the US rescue plan to stop the risk of bank contagion has worked.

“I think what’s happened so far, in terms of the rescues, is kind of done the first aid. The question is — is there a slow bleed that’s still going on,” he told CNBC̵[ads1]7;s “Street Signs Asia.”

“My feeling is that we won’t know if the Fed has been successful in this rescue mission until a few weeks have passed and we don’t see any more problems.”

Rajan, now a professor of finance at the University of Chicago Booth School of Business, noted that questions remain about the collapse of Silicon Valley Bank.

“There are a lot of questions to be answered here,” he said. “How can a medium-sized bank not be aware of interest rate risk?”

He added that regulators need to rebuild confidence in small and medium-sized banks, and that means “signaling very clearly that the banks with problems have been taken care of and I think we’re not there yet.”

– Sumathi Bala

The Hang Seng Index led gains in the Asia-Pacific region on Friday, driven in part by gains in technology stocks.

Baidu was up almost 12% after its US-listed shares rose overnight, following the launch of its Chinese-language ChatGPT alternative – dubbed the Ernie bot.

Shares of streaming platform company Bilibili also rose nearly 8% in early trading.

The HSI itself was up 1.21%, while the technology-heavy Hang Seng Tech index was 3.13% higher.

— Lim Hui Jie

New Zealand will ban TikTok for devices with access to the parliamentary network, Reuters reported, citing parliamentary services chief Rafael Gonzalez-Montero.

Gonzalez-Montero told Reuters in an email that the decision was made after consultation with cybersecurity experts and discussions within the government.

The move comes after CNBC confirmed reports that the US is asking TikTok’s Chinese parent company Bytedance to sell its stake in the app or face a possible US ban. The UK also announced plans to ban the video app on public devices.

—Arjun Kharpal, Jihye Lee

Indonesia’s central bank has maintained its 7-day reverse repo rate at 5.75% and the lending rate at 6.5%.

In a release, the bank explained that the decision is “consistent” with its monetary policy stance to ensure lower inflation expectations and inflation.

The central bank aims to return the core inflation rate to a range of ±1% from 3% in the first half of 2023, and headline inflation to the same range in the second half of the year.

The Indonesian rupiah traded flat against the US dollar at 15.375 on Friday, following the announcement.

— Lim Hui Jie

The Japan Center for Economic Research said the consensus forecast for the economy’s wage growth in 2023 was raised to 3.05% in March from an expected increase of 2.85% seen in January.

This would mark the strongest growth seen in Japan since 1994, the Nikkei reported.

In the research survey, most of the respondents revised their estimates upwards for the total wage and basic wage component, the release showed.

Japan’s shunto wage negotiations ended on Wednesday, Reuters reported – marking the biggest wage increases not seen in decades as inflation levels rise.

– Jihye Lee

The Chinese technology company Baidu on Thursday revealed its ChatGPT rival, called Ernie bot in English.

Shares closed 3.8% higher in the US, in contrast to a steep fall of almost 6.4% in Hong Kong trading on Thursday.

Baidu’s Ernie bot operates primarily in Chinese, although the chatbot can also understand English. The company’s business partners were given priority in first access to Ernie bot.

Home prices in China rose 0.3% in February from January, but fell 1.2% from a year ago, according to Refinitiv data on 70 cities from the National Bureau of Statistics.

Month-on-month house prices rose at the fastest pace since July 2021, as investors look forward to more accommodative policies from the government. In January, prices rose 0.1% on a monthly basis.

Data from 55 cities reported increases in new home prices in February compared to 36 cities that reported an increase in January.

– Jihye Lee

Singapore’s non-oil domestic exports fell 15.6% in February from a year ago – less than expectations for a 16% drop. In January, the reading fell 25% on an annual basis.

Compared to a month ago, domestic non-oil exports fell 8%, more than expectations for a 0.5% decline. The monthly reading rose slightly last month by 0.9%.

Non-oil domestic exports for Singapore’s top 10 markets as a whole fell in February 2023, based on public data – particularly to the EU, Hong Kong and Taiwan, while exports to the US, Japan and Thailand increased.

– Jihye Lee

Tesla has long been an investor favorite for exposure to the transition to electric vehicles, but not everyone is convinced. Berkshire Hathaway-backed BYD, for example, is often touted as a better bet than Tesla.

Ray Wang of Constellation Research believes Tesla versus BYD “is really going to be a story for the ages.”

Professional subscribers can find out which stock is his favorite here.

— Zavier Ong

South Korea said Japan has agreed to lift export restrictions on three semiconductor materials to Seoul, the Ministry of Trade, Industry and Energy said in a statement.

Seoul also said it will drop its dispute against Tokyo with the World Trade Organization once the pledge takes place, the ministry said.

Japan in 2019 removed South Korea from its “white list” of preferred trading partners, after South Korean court rulings ordered Japanese firms to compensate wartime forced laborers.

– Jihye Lee

The European Central Bank followed through on the 50 basis point interest rate hike it flagged at its previous meeting, despite ongoing volatility in the banking sector.

Markets had reduced bets on an upturn following a severe sell-off in European bank shares over the past week.

That takes the bank’s prime rate to 3%.

The eurozone’s overall inflation is 8.5%, well above the central bank’s target of 2%.

“The heightened level of uncertainty reinforces the importance of a data-dependent approach to the Governing Council’s policy rate decisions, which will be determined by its assessment of the inflation outlook in light of incoming economic and financial data, the dynamics of underlying inflation, and the strength of monetary policy transmission,” the ECB said in its decision.

Read more here.

– Jenny Reid

The potential stake in First Republic being discussed by major US banks has grown to $30 billion, reports CNBC’s David Faber.

The largest contributions would come from Bank of America, Wells Fargo, Citigroup and JPMorgan Chase at around $5 billion apiece. Morgan Stanley and Goldman Sachs will put in about $2.5 billion each, the sources said. Truist, PNC, US Bancorp, State Street and Bank of New York will put in about $1 billion each.

-Jesse Pound

Big Tech stocks climbed higher on Thursday, shrugging off fears of the spreading banking crisis. Amazon shares rose 3.3%, while Google parent Alphabet rose 3%. Apple, Meta and Netflix also traded higher.

Strength in technology heavyweights pushed the major stock averages into the green in morning trading. Investors may flock to Big Tech to embrace their megacap safety, betting that the current turmoil will keep the Fed from raising interest rates, benefiting the growth names.

– Yun Li

The turmoil in the banking industry puts the US economy at greater risk of a recession, according to Goldman Sachs.

The Wall Street firm raised the probability of a contraction in the next 12 months to 35%, an increase of 10 percentage points, “reflecting increased near-term uncertainty about the economic effects of stress in small banks,” said Goldman economist Manuel Abecasis in a client note Wednesday night.

Regional bank shares took a beating against Thursday. The SPDR S&P Regional Banking ETF fell 3.7% in early trade.

-Jeff Cox

Sources told CNBC’s David Faber that a group of financial institutions — including Goldman Sachs, Citigroup and JPMorgan Chase — are in talks to put about $20 billion into First Republic.

The news comes after First Republic’s shares have been decimated in recent days, triggered by the collapse of Silicon Valley Bank last Friday and Signature Bank over the weekend.

Shares in First Republic fell more than 30% earlier in the day. In early afternoon trading, however, the stock was down just 3.3% before being halted due to volatility.

— Jesse Pound, Fred Imbert