ASIAN stock markets fell Monday after Swiss authorities arranged the takeover of troubled Credit Suisse amid fears of a global banking crisis ahead of a Federal Reserve meeting to decide on more possible interest rate hikes.
Shanghai, Tokyo and Hong Kong declined. Oil prices retreated.
Swiss authorities on Sunday, March 19, 2023, announced UBS would acquire its smaller rival as regulators try to ease fears about banks following the collapse of two US lenders. Central banks announced coordinated efforts to stabilize lenders including a facility to borrow US dollars if necessary.
Investors worry banks are cracking under the strain of unexpectedly fast, large rate hikes over the past year to cool economic activity and inflation. That caused prices of bonds and other assets on their books to fall, fueling unease about the industry’s financial health.
“Investors are waiting to see where the dust settles on the banking saga before making any bold moves,” Stephen Innes of SPI Asset Management said in a report.
The Hang Seng in Hong Kong lost 2.8 percent to 18,967.52 and the Nikkei 225 in Tokyo shed 1.2 percent to 26,990.25.
The Shanghai Composite Index lost less than 0.1 percent to 3,247.41 after the Chinese central bank on Friday freed up additional money for lending by reducing the amount of money commercial are required to hold in reserve.
The Kospi in Seoul retreated 0.6 percent to 2,382.03 and Sydney’s S&P-ASX 200 lost 1.4 percent to 6,900.00.
India’s Sensex opened down 1.1 percent at 57,341.79. New Zealand and Southeast Asian markets also declined.
Acquisition
The Swiss government said UBS will acquire Credit Suisse for almost US$3.25 billion after a plan for the troubled lender to borrow as much as $54 billion from Switzerland’s central bank failed to reassure investors and customers.
US regulators have also sought to calm fears over threats to banking systems. The Federal Reserve said cash-short banks had borrowed about $300 billion from the Federal Reserve in the week up to Thursday.
Separately, New York Community Bank agreed to buy a significant chunk of the failed Signature Bank in a $2.7 billion deal, the Federal Deposit Insurance Corp. said late Sunday. The FDIC said $60 billion in Signature Bank’s loans will remain in receivership and are expected to be sold off in time.
Concerns persist about other lenders with shaky finances. Credit Suisse is among 30 institutions known as globally systemically important banks. (AP)