Asian financial stocks rebound
Most banking stocks rose across Asia Pacific as concerns over a broader fallout from Silicon Valley Bank’s sudden collapse eased.
The MSCI Asia Pacific Financials Index advanced as much as 2% to lead sectoral gains in the region, snapping three days of losses triggered by the troubles at SVB and Signature Bank. Japanese shares dominated the leaderboard, as the Topix Banks Index surged as much as 4.6%, partly reversing its 16% drop over the past three sessions.
Separate gauges of financials listed in South Korea, Australia and Hong Kong also advanced to follow their US peers higher.
Jitters about the health of the US financial system and its impact on the global economy are abating with expectations that the worst of the fallout may have passed. The aggregate market value of companies included in the MSCI World Financials Index and the MSCI EM Financials Index dropped by more than $450 billion over the last three sessions.
The region’s lenders “hold a low proportion of investments as part of total assets and boast ample liquidity coverage ratios, healthy loan-todeposit ratios [and] robust capitalisation profiles,” Credit Suisse Group AG analysts Soek Ching Kum and Joel Tan wrote in a note.
Authorities have also rushed to stem the fallout and assure investors as the SVB crisis drove attention to unrealised losses related to bond and equity holdings at lenders globally.
US regulators stepped in to protect depositors and shore up the banking sector as the crisis unfolded. Yesterday, Japanese Finance Minister Shunichi Suzuki said it was unlikely that a collapse such as SVB’s would happen in the country, and there was no need to provide liquidity like in the US.
Japan’s Mitsubishi UFJ Financial Group Inc, Resona Holdings Inc, and Tokio Marine Holdings Inc were among the top performers in Asia Pacific.
“Liquidity concern itself is low for Japanese institutions in general because banks are sitting on excess deposits at the central bank and reputation risks that cause bank runs or spikes in cancellation of policies at life insurers look remote,” Jefferies Financial Group Inc. analyst Hideyasu Ban wrote in a note.
Sentiment remains shaky, with Tuesday’s hot US core inflation reading making it tough for the Federal Reserve to pivot on its tightening stance. Credit rating agencies are also sounding the alarm bells — Moody’s Investors Service cut its outlook for the US banking system to negative from stable late Monday.