Asian stocks stumble as banking turmoil sends investors to safety

SINGAPORE: Asian stocks slid on Thursday (Mar 16) and investors turned to the safety of gold, bonds and the US dollar as Credit Suisse became the latest focal point for fears of a banking crisis, leaving markets on edge ahead of a European Central Bank (ECB) meeting later in the day.

Credit Suisse’s announcement that it will take up an option to borrow as much as 50 billion Swiss francs (US$54 billion) from Switzerland’s central bank soothed some of the gravest concerns and provided a floor to bank shares and a boost to Europe futures.

But sentiment was fragile and a nervous air hung over markets. MSCI’s index of Asia-Pacific shares outside Japan fell to 2023 lows and was down 0.9 per cent mid-morning. Japan’s Nikkei dropped 1.3 per cent.

Broader markets were also in the red.

Hong Kong gave up more than 2 per cent, while Tokyo, Sydney, Shanghai, Seoul, Singapore, Wellington, Taipei, Manila and Jakarta were also well down.

“I think we’re getting into the hard hat territory again,” said Damian Rooney, a dealer at Perth stockbroker Argonaut.

“The word contagion is knocking about … we’re getting fear across the whole board here.”

Credit Suisse stock plunged as much as 30 per cent to a record low overnight while the Swiss franc suffered its biggest drop on the US dollar in seven years.

Insurers, banks, miners and consumer-exposed stocks led the losses around Asia as worries grow that a potential credit crunch can worsen a looming economic slowdown.

Commodities also nursed big falls. Brent crude futures were struggling to lift from 15-month lows and hovered around US$74.16 a barrel. Copper slid 2.5 per cent in Shanghai after a 4 per cent drop in London overnight.

S&P 500 futures were up 0.4 per cent in bumpy trade, while support for Credit Suisse from the Swiss National Bank had EURO STOXX futures up 2 per cent and Britain’s FTSE futures up 1 per cent.

“The concrete response from Swiss authorities may help to shore up sentiments in the interim,” said OCBC currency strategist Christopher Wong. “But it remains to be seen if they are sufficient to shore up confidence.”

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