Asian markets fall due to Credit Suisse crisis

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Hong Kong. Asian shares declined on Thursday as concerns over the banking sector deepened after international banking giant Credit Suisse disclosed it would take up to $54 billion in loans to stabilize its finances. The move comes after the bank was found to have “weaknesses” in its financial reporting, leading to a sharp drop in its shares. Credit Suisse’s troubles have fueled fears of a wider banking crisis, with major indices falling more than 1% in Japan, Hong Kong and Australia amid heavy losses in bank shares.

In mid-day Asian trading, Japan’s Nikkei 225 index fell 1.1%, while the Topix Bank share index recorded its worst day in three years, falling more than 4%. Share prices of Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group declined 3% each, similar to losses seen at Credit Suisse. Meanwhile, indices in Hong Kong and Sydney dropped more than 1.5% each, and the Shanghai Composite was 0.5% lower.

Last week, the latest crisis in the banking sector in the US emerged when the news of the collapse of Signature Bank came two days after the collapse of Silicon Valley Bank, the country’s 16th largest bank. Credit Suisse’s situation has now raised concerns among investors and creditors about risk aversion, raising concerns about the cost of funds for small and medium-sized enterprises and start-ups globally. Sayuri Shirai, professor of economics at Keio University, said this in Tokyo.

According to Stephen Innes, managing partner at SPI Asset Management, while fears of a wider contagion may be limited in Asia, the current situation is a cause for concern as banks in Asia are better capitalised. Innes believes the market can return to normal once the US-centric episode fades into the background.

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