Asia report: Most markets lower on Deutche Bank blues

Markets in Asia fell on Friday, ending the quarter on a sour note after concerns about Deutsche Bank kept investor jitters at the fore.

Japan’s Nikkei 225 lost 1.46% to 16,449.84, while the broader Topix was down 1.52% at 1,322.78 by the end of trading.

Banking stocks were down in the country, following on from the Deutsche Bank sentiment, with Mitsubishi UFJ down 2.11%, Mizuho off 2.2% and SMFG 1.52% lower.

Concerns were also high in Tokyo that the Bank of Japan might cut interest rates further into negative territory, potentially eating away more of the banks’ profits - something the central bank governor alluded to last week.

Core consumer price index data - which excludes fresh food prices - was released before markets opened, with prices falling 0.5% year-on-year, a larger decline than the 0.4% predicted.

The core-core price index, which also excludes energy prices, was 0.2% higher.

On the currency front, the yen was still trading at relative strength, clinging firmly to the 100 level against the greenback for much of the session.

It weakened somewhat after the close, however, and was last 0.1% weaker at JPY 101.13.

That led to a decline in the major exporters, with Nissan losing 2.07%, Sony off 2,66% and Toyota down 2.02%.

On the mainland, the Shanghai Composite managed to add 0.23% to 3,005.5, while the Shenzhen Composite tacked on 0.49% to 1,995.6.

South Korea’s Kospi slipped 1.21% to 2,043.63, and Hong Kong’s Hang Seng Index finished 1.86% lower at 23,297.15.

Hong Kong-listed shares in both Standard Chartered and HSBC fell, reflecting the dour mood surrounding banks and lenders during the session.

In Malaysia, trading in Kuala Lumpur was stalled temporarily after a bomb threat was received by the stock exchange building just after midday local time.

It resumed trading at 1430, with the FTSE Bursa Malaysia KLCI finishing down 1.02% at 1,652.55.

The downward trend in Asia followed similar moves in the US overnight, where sentiment tumbled after reports that 10 hedge funds had slashed their exposure to Deutsche Bank.

It was alleged that the funds were concerned the German lender would struggle to cover a potential $14bn settlement with the US Department of Justice, surrounding claims it mis sold mortgage derivatives.

Deutsche Bank shares were down 6.67% at the closing bell in New York, recovering somewhat from losses of more than 9% during the session.

But analysts were sceptical of the report - first published by Bloomberg - refuting its implication that Deutsche Bank has a liquidity problem.

“At the second quarter stage, Deutsche had a liquidity reserve of 223 billion euros and a liquidity coverage ratio of 124 percent,” noted Autonomous Research’s Stuart Graham on Friday.

“We think [Deutsche] has a business model viability issue, but it does not have a near term funding problem.”

Oil prices were lower during Asian trading, with Brent crude last down 1.72% at $48.41 per barrel and West Texas Intermediate losing 1.23% to $47.25.

Australia’s S&P/ASX 200 ended off 0.65% at 5,435.92, with most subindexes in the red.

The weighty financials subindex was off 1.04%, with the major regional banks selling off during the session, reflecting the Deutsche Bank concerns.

Of the so-called ‘Big Four’, Australia and New Zealand Banking Group was down 0.68%, Commonwealth Bank of Australia lost 1.5%, National Australia Bank was 0.96% lower, and Westpac slipped 1.37%.

New Zealand shares joined China in bucking the regional trend, with the benchmark S&P/NZX 50 up 0.2% to 7,361.09, led higher by subscription broadcaster Sky, which added 3.6%.

The media company - unrelated to the London-listed firm of the same name - is set to combine with Vodafone’s New Zealand assets to create a combined media producer and telecommunications provider majority owned by Vodafone.

It was a mixed picture for the down under dollars, with the Aussie last 0.23% weaker at AUD 1.3126 against the greenback, though the Kiwi strengthened 0.08% to NZD 1.3777 per $1.