Asia report: Markets tumble on Credit Suisse fallout

Stock markets across the Asia-Pacific region suffered losses on Wednesday, with concerns over liquidity at Credit Suisse causing a sell-off in banking stocks globally.

“After the fallout in the US from the failure of Silicon Valley Bank and Signature Bank, yesterday saw the European leg of the crisis develop as the chairman of the Saudi Bank was adamant that there would not be any further investment from them for Credit Suisse,” said TickMill market analyst Patrick Munnelly.

“This led to the bank’s shares unravelling through the European and US trading sessions losing as much as 24%.”

However, the Swiss National Bank stepped in overnight, Munnelly noted, stating they would provide whatever liquidity was required to support the bank.

“Asian equity markets pared losses and European futures are trading on the front foot into the open, however, caution is counselled as this was the same scenario we saw at the open Monday before markets sold off heavily as the bailout news was digested.

“Investors remain on tenterhooks as market volatility reverberates around global markets.”

Most bourses finish below the waterline

The Nikkei 225 in Japan fell 0.8% to 27,010.61, while the Topix index dropped 1.17% to 1,937.10.

Among the worst performers on Tokyo’s benchmark were Sumitomo Mitsui, which lost 6.27%, Sumitomo Metal Mining, which fell 6.2%, and Dai-ichi Life, which declined 6.18%.

In China, the Shanghai Composite index fell 1.12% to 3,226.89, while the Shenzhen Component index dropped 1.54% to 11,237.70.

CMOC and China Merchant Energy Shipping were among the top losers in Shanghai, falling 7.88% and 7.45%, respectively.

Hong Kong's Hang Seng Index suffered a 1.72% decline to 19,203.91, with Baidu down 6.36%, AIA Group dropping 5.09%, and CNOOC declining 4.91%.

South Korea's Kospi index slipped just 0.08% to close at 2,377.91, with LG Household & Healthcare down 5.25%, and S-Oil Corporation declining 4.15%.

Australia's S&P/ASX 200 index suffered a 1.46% drop to 6,965.50, with IPH down 10.61% and Fletcher Building losing 7.38%.

In New Zealand, the S&P/NZX 50 index went against the regional trend, gaining 0.7% to 11,699.02, with Pushpay Holdings up 13.01% and the Fonterra Shareholders Fund advancing 8.52%.

Currencies were mixed, with the yen strengthening 0.66% on the dollar to trade at JPY 132.54 and the Aussie advancing 0.36% to AUD 1.5053, while the Kiwi weakened 0.29% on the greenback to change hands at NZD 1.6207.

Oil prices experienced gains, with Brent crude futures up 0.42% on ICE to $74.00 per barrel, and the NYMEX quote for West Texas Intermediate rising 0.41% to $67.89.

Japan’s trade deficit expands, Australia’s jobless rate falls

In economic news, Japan's trade deficit expanded in February to JPY 897.7bn, up 26.2% from the same period last year, according to government data.

The growth in exports in February was 6.5%, while imports increased by 8.3%, lower than what was predicted by economists who forecasted export and import growth of 7.1% and 12.2%, respectively.

“Japanese export growth is likely to remain soft in the first half, given the gloomy prospects for global demand, and our expectations for a measured Chinese reopening rebound,” said Pantheon Macroeconomics chief China economist Duncan Wrigley.

“About half of Japanese exports are in capital equipment, which puts Japan in a strong position over the longer term, given the greater emphasis on economic security around the world.”

That, Wrigley explained, meant building critical industrial capacity at home or multinationals pursuing a ‘China-plus-one’ strategy of investing in an additional supply chain in southeast Asia or elsewhere.

“The resulting global economy probably will be less efficient, but more robust, and require greater capital investment.”

Elsewhere, Australia's unemployment rate fell slightly to 3.5% in February from 3.7% in January, according to seasonally-adjusted government data, which was lower than the expected unemployment rate of 3.6% set by a Reuters poll.

The labour participation rate in the sunburnt country increased to 66.6%, in line with expectations.

Across the Tasman Sea, New Zealand's gross domestic product narrowed by 0.6% in the quarter through December, after recording a 1.7% rise in the prior three months.

Only five out of 16 industries showed an increase in activity compared to the previous quarter, with manufacturing being the biggest contributor to the decline, down 1.9%.

For the year of 2022, GDP expanded 2.2%, lower than the 6% growth recorded in 2021.

Finally, the China Securities Regulatory Commission suspended approvals for new global depository receipt sales amid concerns they could put pressure on mainland-listed stocks, according to Bloomberg sources.

The regulator was reportedly looking at new rules for the offerings, as Chinese investors later convert the securities into shares in China to benefit from price gaps.

Reporting by Josh White for Sharecast.com.