Hong Kong (CNN) Banking stocks in Asia fell on Thursday, dragging broader markets lower, as unrest at Credit Suisse raised fears that the banking turmoil could spread around the world.
The news that the embattled megabank has accepted the Swiss central bank’s offer of financial support in order to staying afloat limited the worst of the losses.
The lender said it would borrow up to 50 billion Swiss francs ($53.7 billion) from the Swiss National Bank. Investors sent shares of Switzerland’s second-biggest lender plummeting by up to 30% on Wednesday.
The bank called the loan “a decisive action to preemptively strengthen its liquidity.”
Japan’s Topix Banks Index, a key index that tracks Japanese lenders, fell 6.4% during the morning session. It then pared some losses and was last trading 3.7% lower. The index has lost more than 8% so far this week.
In Hong Kong, Standard charter (SCBFF) fell nearly 4%. HSBC Holdings (HSBCPRA) fell 2.5%. Local bank BOC Hong Kong fell 3.1%.
In South Korea, major lenders Shinhan Financial Group and KB Financial Group fell 1.2% and 0.5% respectively.
“What we’re seeing is a definite collapse in investor confidence in the technology and banking sectors,” said Clifford Bennett, chief economist at ACY Securities, a Sydney-based online brokerage. “It is highly unlikely that these concerns will simply go away anytime soon.”
“Regardless of balance sheets, a loss of investor and depositor confidence can bring down any bank,” he added.
Japan’s reference Nikki 225 (N225) was down 2.2% in early trade. It last traded down 0.9%. that of Hong Kong Hang Seng (HSI) lose 1.3%. China Shanghai composite (SHCOMP) fell slightly by 0.4%.
from Korea Kospi (KOSPI) fell as low as 1.4%, but then reversed all losses and stabilized for the last time.
The Korean won weakened sharply against the U.S. dollar, down nearly 1% in morning trade, as investors piled into traditional safe-haven currencies such as the greenback. The Chinese yuan also depreciated against the dollar, down 0.1%.
Bank stocks were hammered in Europe and New York on Wednesday after Shares of Credit Suisse fell to a new record high, reeling investors already reeling from the rapid collapse of two US banks in a week.
Bank failures had already forced US regulators to take emergency measures on Sunday to protect the deposits of two lenders: Silicon Valley Bank and Signature Bank.
“Markets could get messy amid the fallout from the Silicon Valley Bank collapse, alongside continued uncertainty over the future path of the global economy and interest rates,” said Marty Dropkin, chief executive. Asia-Pacific equities at Fidelity International.
He noted that companies have started giving more cautious guidance. There has also been an increasing number of layoff announcements.
“These are clear indications that companies are beginning to feel pressure on their profit margins,” he said. “We believe that an earnings correction will take place this year.”