Asia-Pacific markets fall on bank fears, Credit Suisse announces ‘decisive action’ to raise funds

New Zealand’s gross domestic product fell 0.6% in the quarter ended December 2022, a reversal from a 1.7% increase in the previous quarter.

For the full year 2022, GDP grew by 2.2% versus the 6% recorded for the full year 2021.

Out of 16 industries, only five saw an increase in activity compared to the previous quarter.

Manufacturing was the main driver of the decline, down 1.9%.

— Lim Hui Jie

The Swiss franc saw continued volatility following developments surrounding Credit Suisse – and was last up 0.17% against the US dollar to reverse an earlier weakening after the lender announced it would borrow nearly US$54 billion from the Swiss National Bank .

The Japanese yen also saw further strengthening to trade at 132.86 against the greenback. The Korea won was up 0.13% against the US dollar to 1,311.24.

– Jihye Lee

CreditSuisse announced it would borrow up to 50 billion Swiss francs ($53.69 billion) from the Swiss National Bank under a secured credit facility and a short-term liquidity facility.

The moves will “support Credit Suisse’s core businesses and clients as Credit Suisse takes the necessary steps to create a simpler and more client-centric bank,” the company said in an announcement.

In addition, the bank is making a cash offer for ten US dollar-denominated senior notes for a total purchase price of up to US$2.5 billion – and a separate offer for four euro-denominated senior notes for a total of up to €500 million the company with.

Read more here.

– Jihye Lee

Banks in South Korea and Australia reversed earlier losses after Swiss lender Credit Suisse announced liquidity measures to allay investor fears.

The Commonwealth Bank of Australia was able to erase most of its losses in volatile trading – it traded 0.15% lower after previously falling as much as 1.97%.

Westpac Banking And National Bank of Australia fell as much as 2.35% and 1.81%, respectively, before reversing some of its declines, most recently falling 1.34% and 0.58%, respectively.

Some South Korean banks fell as much as 2% earlier – Woori Financial Group was last down 1.62%, Shinhan Finance traded lower 1.69% and KB Kookmin Bank fell 1.12%.

— Lim Hui Jie

Japanese banks trimmed some losses Thursday morning after Credit Suisse said it would pre-emptively strengthen its liquidity position by borrowing CHF 50 billion ($54 billion) from the Swiss National Bank and launching a public offering of CHF 3.00 worth of bonds billion would give .

Before the announcement, shares of MUFG lost over 5% and was the top loser in the Topix but has narrowed to just 3.35% Sumitomo Mitsui Financial Group slipped 5% and has since retreated to a 3.59% decline.

The Topix as a whole was over 2% lower prior to the announcement but is now slightly down at 1.4%.

— Lim Hui Jie

Australia’s unemployment rate fell slightly to 3.5% in February from 3.7% in January, seasonally adjusted government data showed.

That was lower than expectations for an unemployment rate of 3.6%, according to a Reuters poll.

The business activity rate was in line with expectations at 66.6%, up from 66.5% in the previous month.

The Australian dollar edged up 0.23% to 0.6630 against the US dollar.

Japan’s trade deficit widened to 897.7 billion yen ($6.76 million) in February, up 26.2% from the same period a year ago.

According to government data, exports rose 6.5% in February while imports rose 8.3%. These were below economists’ forecasts of export and import growth of 7.1% and 12.2%, respectively.

Notably, Japan’s exports to Europe and the US rose 18.6% and 14.9% on an annual basis, respectively, while exports to China fell 10.9%.

— Lim Hui Jie

Japan’s Shunto wage negotiations concluded on Wednesday, Reuters reported — marking the biggest wage increases in decades as inflation rates soar.

Analysts polled by Reuters expected overall wages for the economy to rise about 3%, the largest increase since 1997.

Prime Minister Fumio Kishida called for better wages for workers in Japan, citing a weaker currency and higher commodity prices leading to increased import costs in an overall high inflation environment, the report said.

– Jihye Lee

Bank of the First Republic is considering options to bolster liquidity, including a sale of the lender, Bloomberg reported, citing people familiar with the matter.

The bank is expected to attract interest from its competitors and no decision has been made yet, the report said.

Shares of the bank rose 3.92% in after-hours trading in the U.S. on Wednesday night — after posting a more than 20% surge earlier in the week along with regional banks.

Goldman Sachs on Wednesday cut its 2023 economic growth forecast by 0.3 percentage points to 1.2%, citing a slowdown in lending from small and medium-sized banks amid the turmoil in the broader financial system.

Analysts expect small banks will try to conserve liquidity in case they need to meet depositor withdrawals, leading to a significant tightening of bank lending standards, which could weigh on aggregate demand. “Small and mid-sized banks play an important role in the US economy,” they wrote.

Banks with assets under $250 billion account for about 50% of US commercial and industrial lending, the company found. Click here to read more.

—Pia Singh

The Swiss National Bank said Wednesday it would provide liquidity to banking giant Credit Suisse if needed.

A joint statement by the SNB and the Swiss Financial Market Supervisory Authority read: “FINMA confirms that Credit Suisse meets the higher capital and liquidity requirements for systemically important banks. In addition, the SNB will make liquidity available to the globally active bank if required. “

Credit Suisse shares were under pressure on Wednesday after the bank’s biggest investor said it would not provide any further financial support. Credit Suisse shares listed in the US recently lost more than 18%.

—Fred Imbert

CreditSuisse Stocks fell more than 23% on the market open in a big way. Shares fell to a new all-time low of $1.75.

The troubles at the Swiss bank have reignited turmoil among financial stocks, with US mid-tier banks under particular pressure. The bank’s largest investor, the Saudi National Bank, said it could not provide any further financial support to the company.

– Christina Cheddar Berk

ADR shares of Swiss lender Credit Suisse plunged 21% in premarket trading.

The Saudi National Bank said it could not provide any more funds, Reuters reported. “We can’t because we would go over 10%. It’s a regulatory issue,” the Governor of the National Bank of Saudi Arabia, Ammar Al Khudairy, told Reuters on Wednesday.

The troubled Swiss bank said earlier this week it had identified “material weaknesses” in its financial reporting for 2022 and 2021.

– John Meloy

Several European bank stocks were halted on Wednesday as a sharp decline in Credit Suisse shares dragged the sector lower, along with the broader market.

The shares of Societe Generale as well as the Italian Monte dei Paschi and UniCredit were stopped. Credit Suisse, meanwhile, plunged 20% after its largest investor said it would not provide any further aid to the troubled bank.

These moves come as traders around the world grapple with the aftermath of Silicon Valley Bank’s failure.

“The failure of Silicon Valley Bank has had an impact on the European stock market,” wrote Citi strategist Beata Manthey. “While US authorities have stepped in to limit contagion risks, continued volatility in bank stocks means there may be even broader spillovers at play.”

Manthey noted that the conditions for profit-taking in the European markets are already ripe. “However, investors remain net long European banks despite having reduced their position from maximum longs just a month ago. This means the positioning could unravel even further.”

– Fred Imbert, Michael Bloom