May 29, 2024

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Asian markets are stuttering as SVB fears shake the banking sector

Asian markets are stuttering as SVB fears shake the banking sector

Hong Kong (CNN) Asian stocks fell broadly On Tuesday, banking stocks were dragged down, with fears of the Silicon Valley bank’s repercussions Collapses It dominated the market despite the US government’s efforts to stabilize the financial system.

Japan Nikkei 225 index (N225) It fell by 2.19% to mark its third consecutive day of decline. Hong Kong Hang Seng (HSI) It briefly fell 2.5%, before paring losses in the afternoon. Korea Cosby (Cosby) lost nearly 3%. China Shanghai boat (shcomb) down 0.65%.

Banks were the most affected sector in the region.

HSBC Holdings (HBCYF) It fell more than 5% in Hong Kong after the banking giant pledged to inject 2 billion pounds ($2.4 billion) of liquidity into its UK unit SVB, which had Bought for 1 pound. Standard Chartered sank nearly 7%.

The sell-off occurred despite extraordinary measures taken by US regulators over the weekend to avert a possible banking crisis after the collapse of SVB. The California-based lender It fell amazingly fast On Friday, it is the largest bank closing in America since 2008.

Investors are now nervous about whether SVB’s demise could ignite a broader banking sector collapse. On Monday, US stocks were mixed, with banking stocks hurting.

“Investors fear that other financial institutions are taking large unrealized losses on their balance sheets due to significantly higher interest rates,” DBRS Morningstar analysts said Monday.

They said the fear was “regardless of the basics”.

US Treasury yields fell sharply on Monday as investors flocked to safe-haven assets. The two-year Treasury yield briefly fell by more than 50 basis points, the biggest daily drop in decades.

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“Currently, markets are speculating on a Fed turn, but are pricing in more contagion in the banking sector turmoil, which ultimately weighs on risk sentiment,” ING analysts wrote in a research note on Tuesday.

They said that if the Fed lives up to the market’s hopes and ends the rate-tightening cycle, there will be plenty of room for market sentiment to recover.

Other banking stocks in Asia and the Pacific also declined.

In Hong Kong, shares of Bank of China (Hong Kong) and Hang Seng Bank fell by 3.7% and 1.3%, respectively. AIA Group, the Asian insurer, traded down 4.7%.

In Tokyo, Mitsubishi UFJ Financial Group, Japan’s largest bank, lost 8.4%. Sumitomo Mitsui Financial Group and Mizuho Financial Group both fell more than 7%.

In Seoul, KB Financial Group and Shinhan Financial Group fell 3.6% and 2.5%, respectively.

In Shanghai, China Merchants Bank fell 1.2% and China Minsheng Banking Corp slipped 0.3%.

In Sydney, Macquarie Group fell 3.1% and ANZ Group fell 1.5%.