Stock markets across Asia fell on Thursday as troubles at international banking giant Credit Suisse intensified fears of a wider bank crisis.
Major indexes in Japan, Hong Kong and Australia fell by over 1 per cent amid heavier losses in bank shares, the BBC reported.
This comes as Credit Suisse said it would borrow up to $54 billion to shore up its finances.
Shares in the bank plunged after it found “weakness” in its financial reporting.
As a result, Japan’s Nikkei 225 index fell by 1.1 per cent at mid-day Asian trading. The Topix Banks share index fell by more than 4 per cent after recording its worst day in three years earlier this week.
Shares in Mitsubishi UFJ Financial Group, the country’s largest lender by assets, were down by 3 per cent. This was in line with losses at counterparts Sumitomo Mitsui Financial Group and Mizuho Financial Group, the BBC reported.
Indexes in Hong Kong and Sydney fell by over 1.5 per cent, while the Shanghai Composite was 0.5 per cent lower.
Problems in the banking sector surfaced in the US last week with the collapse of Silicon Valley Bank, the country’s 16th-largest bank, followed two days later by the collapse of Signature Bank, the BBC reported.
Developments at Credit Suisse were “amplified” by problems at the smaller banks, Sayuri Shirai, an economics professor at the Keio University in Tokyo said.
“Investors and creditors are concerned about risk. Banks may suffer from raising funds, which in turn will affect the cost of funding for SMEs and start-ups globally,” she added.
“Markets could return to normal quickly once the US centric episode fades to the back burner. Broader contagion fears at this stage are limited as banks are so much better capitalised in Asia,” said Stephen Innes, managing partner at SPI Asset Management.