Most banking stocks rose across Japan, South Korea and Australia as concerns over a broader fallout from Silicon Valley Bank’s sudden collapse eased.
(Bloomberg) — Most banking stocks rose across Japan, South Korea and Australia as concerns over a broader fallout from Silicon Valley Bank’s sudden collapse eased.
The Topix Banks Index surged as much as 4.6%, partly reversing its 16% drop over the past three sessions that was triggered by the troubles at SVB. A gauge of Korean lenders was 1.8% higher and Australian financials also climbed as trading kicked off in the Asia Pacific region.
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-to-deposit ratios [and] robust capitalization profiles,” Credit Suisse Group AG analysts Soek Ching Kum and Joel Tan wrote in a note.
READ: Asia Banks Don’t Face Contagion From SVB Collapse: Credit Suisse
Authorities have also rushed to stem the fallout and assure investors.
US regulators stepped in to protect depositors and shore up the banking sector as the crisis unfolded. On Wednesday, 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.
Mitsubishi UFJ Financial Group Inc. and Shimane Bank Ltd. were among the top performers on the local bank gauge.
“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.
Investor sentiment remains shaky, however, with Tuesday’s hot US core inflation reading making it tough for the Federal Reserve to pivot on its tightening stance.
Meanwhile, the broader MSCI Asia Pacific Financials Index rose as much as 1.1% to lead sectoral gauges in the region, snapping three days of losses.
READ: SVB Is ‘the Next Russia’ for Funds; Japan Insurers’ Storm: BI APAC Equity
–With assistance from Naoto Hosoda.
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