Asian stock markets rise after measures to boost confidence in troubled banks in Europe and the United States.
Fears of a global banking crisis have eased following the roll-out of multibillion-dollar lifelines for troubled lenders in Europe and the United States, with Asian stock markets recovering from previous lows.
Shares rose Friday in China, Japan, South Korea, Malaysia, Australia, the Philippines and Hong Kong, following gains on Wall Street after the largest US banks unveiled a $30 billion bailout for troubled regional lender First Republic Bank.
MSCI’s most representative index of Asia-Pacific stocks excluding Japan rose 0.9 percent, reversing previous losses, while Japan’s Nikkei 225 rose 0.5 percent.
China’s blue-chip index gained 0.8 percent, while Hong Kong’s Hang Seng rose 1.2 percent.
Asian banking stocks joined the gains, with the MSCI Asia Pacific Financials index rising as much as 0.4 percent after earlier losses, Bloomberg reported.
Japanese banks, including Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group, were among the big winners, up as much as 2 percent, Bloomberg said.
“All in all, I would say that central banks are ready. That’s why the markets are calmer,” Alicia García-Herrero, chief economist for Asia Pacific at Natixis in Hong Kong, told Al Jazeera.
“I don’t think we have averted a crisis, to be honest, I think it’s too early to say, but what I know is that the Fed in particular, and I would say the Swiss National Bank, have very quickly responded.” Garcia-Herrero added.
Asian markets fell on Thursday amid concerns about the financial health of Credit Suisse and the fallout from the collapse of Silicon Valley Bank (SVB), fueling fears of a global banking crisis.
Financial authorities around the world have been scrambling to avoid a financial crisis since last week’s sudden implosion of the SVB, which failed after customers withdrew in response to the bank’s hefty losses from its sale of US Treasury bonds.
Brian Levitt, a global strategist at Invesco, told Reuters the market is focusing on smaller banks with specialized lenders. After SVB – which focused mainly on the tech industry – investors turned their attention to the next bank exposed to interest rate and specific credit risks.
“First Republic Bank, which has significant exposure to the coastal real estate markets, appears to be next on the list,” he said.
The California-based lender saw its share price drop more than 70 percent early in the week. But on Thursday, US stocks rallied after 11 US banks — including Bank of America, Citigroup and JPMorgan Chase — announced they would deposit $30 billion into First Republic.
“The actions of America’s largest banks reflect their confidence in the nation’s banking system,” the banks said in a statement.
In Europe, markets were boosted by the European Central Bank’s decision to raise benchmark interest rates by 0.5 percent amid fears the bank could take a more aggressive stance.
Investors also welcomed the announcement that Credit Suisse, which has long been dogged by doubts about its financial health, would borrow up to 50 billion Swiss francs ($54 billion) from the Swiss central bank to bolster confidence.
“The expectation that a financial crisis has been averted, at least for now, has put downward pressure on yields and depreciated the US dollar,” Carlos Casanova, senior economist for Asia at UBP in Hong Kong, told Al Jazeera.