Asian bank shares fall as Credit Suisse fears troubled markets
Hong Kong (CNN) Bank shares in Asia fell on Thursday, dragging broader markets lower, as problems at Credit Suisse sparked fears the banking crisis is spreading around the world.
News that the beleaguered megabank has taken up the Swiss central bank’s offer of financial support in order staying afloat has limited the worst losses.
The lender said it would borrow up to 50 billion Swiss francs ($53.7 billion) from the Swiss National Bank. Investors sent shares in Switzerland̵[ads1]7;s second-biggest lender down as much as 30% on Wednesday.
The bank called the loan a “decisive action to advance liquidity.”
Japan’s Topix Banks Index, a key index that tracks Japanese lenders, fell as much as 6.4% in the morning session. It then pared some losses and last traded 3.7% lower. The index has lost more than 8% so far this week.
In Hong Kong, Standard Chartered (SCBFF) decreased almost 4%. HSBC Holdings (HSBCPRA) fell 2.5 percent. Local bank BOC Hong Kong fell 3.1 percent.
In South Korea, major lenders Shinhan Financial Group and KB Financial Group fell 1.2% and 0.5% respectively.
“What we’re seeing is a clear unraveling of investor confidence across both the technology and banking sectors,” said Clifford Bennett, chief economist at ACY Securities, a Sydney-based online brokerage. “It is highly unlikely that these concerns are going to go away anytime soon.”
“Regardless of balance sheet, loss of investor and depositor confidence can destroy any bank,” he added.
Japan’s benchmark Nikkei 225 (N225) was down a whopping 2.2% in early trading. It was last traded 0.9% lower. Hong Kong’s Hang Seng (HSI) fell 1.3%. China’s Shanghai composite (SHCOMP) decreased by 0.4 percent.
Korea’s Kospi (KOSPI) fell a whopping 1.4%, but then reversed all losses and was last traded flat.
The Korean won weakened sharply against the US dollar, down nearly 1% in morning trade, as investors piled into traditional safe-haven currencies such as the greenback. The Chinese yuan also weakened against the dollar, down 0.1%.
Bank shares were hammered in Europe and New York the following Wednesday Shares in Credit Suisse fell to a new record low, rattling investors already reeling from the rapid collapse of two US banks in the space of a week.
The bank failures had already forced US regulators to take emergency action on Sunday to protect deposits at both lenders: Silicon Valley Bank and Signature Bank.
“Markets could be muddled amid the fallout from the Silicon Valley Bank collapse, along with ongoing uncertainty about the future path of the global economy and interest rates,” said Marty Dropkin, Asia Pacific head of equities at Fidelity International.
He noted that companies have begun to provide more cautious guidance. There has also been an increasing number of layoff notices.
“These are stark indications that companies are beginning to feel pressure on profit margins,” he said. “We believe a profit correction will occur this year.”
