Hong Kong shares slide 3%; Asia markets mostly fall after UBS buys Credit Suisse

There is “adequate” liquidity in India’s banking system and the Reserve Bank of India will continue to watch the sector closely, said Shanti Ekambaram, whole time director of Kotak Mahindra Bank.

Her comments come after the recent collapse of regional banks in the U.S, as she highlighted that India’s banking system is different.

“There has been credit growth in India and you see very strong growth for the last 18 to 24 months where banks have actually been deploying money into credit,” Ekambaram told CNBC’s “Street Signs Asia.”

“The quantum and the proportion of the balance sheet in investments deterioration, [and] the nature of the wholesale deposits, makes India’s banking sector very different from what we have seen happening in the U.S.,” she added.

Still, Ekambaram warned that if the global situation worsens and capital flows come to a halt, India’s growth will slow down and that will affect banks in the county.

— Charmaine Jacob

Hong Kong’s Hang Seng index led losses in the Asia-Pacific region on Monday, sliding 3%.

The largest loser on the HSI was HSBC, which slid 6.51%. Other notable names that led the top losers were hotpot chain Haidilao, which fell 6%, as well as pharmaceutical company Hansoh Pharmaceutical.

The tech focused Hang Seng Tech index saw a larger loss, down 3.36%. However, internet search company Baidu bucked the trend and gained 1.13%, one of the top gainers on the HSI and continuing its rally from Friday.

— Lim Hui Jie

Christopher Kent, assistant governor of the Reserve Bank of Australia, said domestic banks are robust despite the global panic triggered by banking failures in the U.S.

“Conditions in global bond markets have been strained recently following the failure of Silicon Valley Bank in the United States,” he said in a speech on Monday.

“Volatility in Australian financial markets has picked up but markets are still functioning and, most importantly, Australian banks are unquestionably strong.”

Banks are already well advanced on their bond issuance plans for the year and could defer “for a while,” Kent said. “Even if markets remain strained . . . Australian banks’ issuance will continue to benefit from the strength of their balance sheets.”

In a similar move, Hong Kong and Singapore authorities have also said that their banking systems were strong and stable.

Read full story here.

— Sumathi Bala

Emerging markets could perform “pretty strongly” in the years ahead after an “abysmal” 2022, said Mitul Kotecha, head of emerging markets strategy at TD Securities.

They may even start performing well this year “once we get through this shock,” Kotecha said in reference to the collapse of regional banks in the U.S.

The financial services firm expects the U.S. dollar and U.S. treasury yields to continue to weaken this year, and that will bode well for emerging market currencies and local bonds.

“I think emerging markets will do well not just in a medium, but longer term perspective,” Kotecha predicted.

— Charmaine Jacob

Hong Kong’s Monetary Authority and its Securities and Futures Commission announced Credit Suisse operations in the city will continue as usual, after the UBS takeover of the embattled bank over the weekend.

Credit Suisse’s operations in Hong Kong comprise a branch supervised by the HKMA and two licensed corporations supervised by the SFC.

The regulators said the “customers can continue to access their deposits with the branch and trading services provided by Credit Suisse for Hong Kong’s stock and derivatives markets.”

“The exposures of the local banking sector to Credit Suisse are insignificant,” regulators pointed out, adding that total assets of the Hong Kong branch amounted to about HK$100 billion (US$12.74 billion), representing less than 0.5% of its banking sector. 

Shares of Hong Kong banks were down sharply on Monday morning, with HSBC shedding 4.37% and being one of the top losers on the HSI, while Standard Chartered lost 3.81%.

Shares of Australian gold miners surged on Monday morning as gold prices traded near a one year high, bucking the wider trend in Australian markets.

Gold traded at $1,977.70 per ounce on Monday, its highest level since April 2022.

The Bank of Japan predicted inflation could slow this year, according to the central bank’s summary of opinions from its March meeting.

“The year-on-year rate of increase in the consumer price index (CPI) is likely to decelerate toward the middle of fiscal 2023 due to the effects of pushing down energy prices from the government’s economic measures,” the report said.

While the BOJ noted Japan’s economy has been “resilient on the whole,” it also expressed the need to carry on with its monetary easing policy.

“Until achievement of the price stability target of 2% sufficiently comes into sight, it is necessary for the Bank to continue with the current monetary easing, including yield curve control,” the report stated.

Japan’s CPI reading for February slowed from a 42-year high to 3.3%.

— Lee Ying Shan

The Monetary Authority of Singapore (MAS) said on Monday that the UBS takeover of troubled rival Credit Suisse is not expected to impact the stability of Singapore’s banking system.

“MAS said today that Credit Suisse Group AG will continue operating in Singapore with no interruptions or restrictions, following the announced takeover by UBS Group AG. Customers of Credit Suisse will continue to have full access to their accounts and Credit Suisse’s contracts with counterparties remain in force,” said MAS, in a statement on Monday.

“The takeover is not expected to have an impact on the stability of Singapore’s banking system,” said MAS.

MAS added that both banks do not serve retail customers, as their primary activities in Singapore are in private banking and investment banking.

The Straits Times Index fell 0.58% in early trading. Shares of DBS Bank were up 0.15% while OCBC Bank and UOB were down 0.49% and 0.18% respectively.

The People’s Bank of China left the loan prime rates for 1-year and 5-year unchanged, after cutting the reserve requirement ratio for almost all banks by 0.25 percentage points last week.

The 1-year LPR stayed at 3.65% while the 5-year LPR remained at 4.3%, both unchanged since August last year.

The offshore Chinese yuan strengthened 0.14% to trade at 6.8795, while the onshore Chinese yuan was flat, trading at 6.885 against the U.S. dollar.

— Lim Hui Jie

The Mid-Size Bank Coalition of America has asked regulators to guarantee all deposits for the next two years, according to a Bloomberg report.

The report cited a letter from MBCA, in which the coalition argued that a deposit insurance would stop rapid withdrawals from smaller banks, stabilizing the banking sector.

MBCA proposed the banks themselves would fund the expanded insurance program by increasing the deposit-insurance assessment, said the Bloomberg report.

The coalition’s request comes after U.S. Treasury secretary Janet Yellen said not all depositors will be protected over the FDIC insurance limits of $250,000 per account, despite the FDIC securing all deposits for Silicon Valley Bank and Signature Bank.

— Yeo Boon Ping

The tech sector was one bright spot last week as the banking crisis rocked markets.

But is it time to buy into the rally? Market pros urge caution — but think some stocks are set to outperform.

CNBC Pro subscribers can read more here.

— Weizhen Tan

The U.S. Federal Reserve along with five other central banks have jointly announced to increase the frequency of their U.S. dollar swap line arrangements from weekly to daily.

The five central banks are the Bank of Canada, Bank of England, Bank of Japan, European Central Bank and Swiss National Bank.

The frequency of 7-day maturity operations will increase from weekly to daily, beginning March 20 and continuing to “at least” the end of April.

In doing so, the monetary authorities said the move would “serve as an important liquidity backstop to ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses.”

The move comes ahead of the Fed’s two-day meeting this week announce its intentions on interest rates.

— Lim Hui Jie, Jeff Cox

The opportunity in global EVs is massive, with the European market alone set to be worth $300 billion by 2030, according to estimates from Bernstein.

While EV automakers may be an obvious play, Wall Street analysts have named a slew of stock picks across a range of sectors as a way to cash in.

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— Zavier Ong

The FDIC announced a deal to sell “substantially all deposits and certain loan portfolios” of Signature Bank to Flagstar Bank, a subsidiary of New York Community Bancorp.

The agency said Signature’s 40 former branches will begin operating under Flagstar’s name on Monday.

The agreement involves $38.4 billion of Signature’s assets, including $12.9 billion of loans the FDIC said were bought at a discount of $2.7 billion.

It said, however, Flagstar’s bid did not include the roughly $4 billion in deposits related to Signature’s digital banking business. The agency said it will provide those deposits directly to digital banking customers. The FDIC also said about $60 billion in loans will remain in receivership.

— Christine Wang

UBS finalized an agreement to buy its rival Credit Suisse for $3.2 billion. Swiss regulators played a key role in facilitating the deal in an effort to quell a contagion threatening the banking sector.

Credit Suisse saw its shares tumble last week after its largest investor, the Saudi National Bank, declined to provide additional funding. Despite subsequent measures from Credit Suisse and Swiss regulators to calm investors’ fears — including a loan of up to 50 billion Swiss francs ($54 billion) — shares plunged 25.5% by the end of the week.

Under the deal, Credit Suisse shareholders will receive one UBS share for every 22.48 Credit Suisse shares. The combined bank will have $5 trillion of invested assets, according to UBS.

— Hakyung Kim

The Federal Reserve’s decision on whether to raise interest rates by 25 basis points or implement no rate hike at next week’s policy meeting could depend on what happens in the coming days, said Nick Timiraos, chief economics correspondent at The Wall Street Journal.

The Fed is expected to approve a quarter-point, or 25 basis point, hike to interest rates at its meeting next week. But market observers say the central bank’s next decision on interest rates has been made less certain over the past week amid the bank crisis.

“I’m hearing the same thing everybody else is hearing, which is that there’s a case to be made for going by 25 and there’s a case to be made for skipping,” he said on CNBC’s “The Exchange.” “I think it really depends … on what happens with the state of the markets and this financial instability risk over the next few days.”

— Alex Harring

First Republic Bank took another leg lower in afternoon trading, plunging more than 30% as investors positioned themselves in the final hour of trading this week. Friday’s nosedive has brought the stock down more than 70% from where it started the week.

The drop has also weighed on the SPDR S&P Regional Banking ETF (KRE), which was down 6% on Friday and poised for a weekly loss of more than 14%.