Asia report: Stocks mixed as investors weigh SVB collapse

Stocks in Asia-Pacific had a mixed performance on Monday, as investors were weighing the collapse of the US-based technology-focussed banks Silicon Valley Bank and Signature Bank over the weekend.

“Asian markets have posted modest gains overnight on news out of the UK that SVB UK will be acquired by HSBC for £1, shoring up the beleaguered subsidiary of Silicon Valley Bank, who have now been officially backstopped by the FDIC,” explained TickMill Group’s Patrick Munnelly.

“This comes in the light of another US lender Signature Bank also requiring government support.

“Official announcements have confirmed that depositors in both institutions will be made whole at the open on Monday.”

Munnelly noted that the weekend’s developments saw US equity futures soar, recovering over 1.5% on the overnight session and erasing much of Friday’s losses.

“Goldman Sachs now believes that the Fed’s hands are tied by the banking system stress - as such, they do not see the FOMC raising rates at the 22 March meeting.”

Bourses mixed as investors weigh SVB failure

In Japan, the Nikkei 225 lost 1.11%, closing at 27,832.96, while the Topix index decreased by 1.51%, closing at 2,000.99.

Mitsubishi Motors and Mazda Motor both experienced significant losses on the benchmark index, falling by 6.46% and 5.96%, respectively, while Concordia Financial Group dropped by 5.29%.

China's Shanghai Composite gained 1.2%, closing at 3,268.70, while the Shenzhen Component increased by 0.55%, closing at 11,505.02.

Hunan New Wellful and Changzhou Langbo Seal Polytron Technologies were among the top performers in Shanghai, surging by around 10% each.

In Hong Kong, the Hang Seng Index rose by 1.95%, closing at 19,695.97, with CNOOC, China Petroleum & Chemical Corporation, and China Resources Beer Holdings leading the gains, rising by 5.96%, 5.74%, and 5.52%, respectively.

South Korea’s Kospi index rose by 0.67%, closing at 2,410.60, with ENPlus and Hanning Chem as the top performers, surging by 16.02% and 7.51%, respectively.

However, in Australia, the S&P/ASX 200 index fell by 0.5%, closing at 7,108.50, with Judo Capital Holdings and SkyCity Entertainment Group experiencing significant losses, dropping by 29.64% and 17.62%, respectively.

Meanwhile, the S&P/NZX 50 index in New Zealand also decreased by 0.46%, closing at 11,672.90, with SkyCity Entertainment Group and Heartland Group losing by 4.1% and 4.05%, respectively.

In currencies, the yen strengthened 1.06% on the dollar, last trading at JPY 133.60, while the Aussie and Kiwi gained 0.69% and 0.67% on the greenback, respectively, to change hands at AUD 1.5094 and NZD 1.6204.

On the energy front, Brent crude oil prices fell 1.63% on ICE to last trade at $81.43 per barrel, while the NYMEX quote for West Texas Intermediate decreased 1.76% to $75.33.

Firms clarify their exposure, HSBC takes on SVB UK

A number of regional firms clarified their exposure to the failed SVB in announcements during Monday’s session.

In a filing, BeiGene disclosed that its uninsured cash deposits at SVB amounted to approximately 3.9% of its total as of 31 December.

Similarly, Shanghai Pudong Development Bank, which had a joint venture with SVB, stated that the China venture’s balance sheet was “independent”.

Broncus Holding noted that its deposit at SVB represented approximately 6.5% of the company's cash and cash equivalents and had no other exposure to SVB.

Meanwhile, Mobvista indicated that it had minimal exposure to SVB, with only a "minimal portion" of its cash held in deposit accounts at the bank, amounting to roughly $0.43m.

In a separate development, HSBC announced its acquisition of Silicon Valley Bank's UK subsidiary for £1 late in the Asian day.

The move was expected to bolster HSBC's commercial banking franchise and improve its ability to serve fast-growing firms, including those in the technology and life-science sectors, in the UK and globally.

HSBC Group CEO Noel Quinn said the acquisition was a strategic fit for the bank's UK business.

“It strengthens our commercial banking franchise and enhances our ability to serve innovative and fast-growing firms, including in the technology and life-science sectors, in the UK and internationally,” Quinn said.

Victoria Scholar, head of investment at Interactive Investor, said HSBC’s acquisition of SVB UK was a “welcome development” for depositors and the wider banking system.

“It means that SVB UK will avoid insolvency proceedings and its customers will be able to access deposits and banking services as normal from today.

“It will be interesting to see whether the start-up friendly style of lending offered by SVB and not the larger more traditional banking behemoths, will continue to be possible under the HSBC umbrella.”

Reporting by Josh White for Sharecast.com.