Asian markets tumble as SVB fallout fears rattle banking sector

Asian stock markets fell broadly on Tuesday, dragged down by banking shares, as fears over the fallout of Silicon Valley Bank’s collapse gripped the market despite US government efforts to stabilize the financial system, CNN reports.

Japan’s Nikkei 225 tumbled 2.19 per cent to post its third straight day of declines. Hong Kong’s Hang Seng (HSI) briefly dropped 2.5 per cent, before trimming losses in the afternoon. Korea’s Kospi lost almost 3 per cent. China’s Shanghai Composite shed 0.65 per cent.

Banks were the hardest hit sector across the region.

HSBC (HBCYF) Holdings plunged more than 5 per cent in Hong Kong after the banking giant pledged to inject 2 billion pounds ($2.4 billion) of liquidity into SVB’s UK unit, which it had bought for 1 pound. Standard Chartered Bank sank nearly 7 per cent.

The sell-off happened despite extraordinary measures by US regulators over the weekend to avert a potential banking crisis following the collapse of SVB. The California-based lender fell with astounding speed on Friday, marking America’s biggest bank shutdown since 2008.

Investors are now on edge over whether the demise of SVB could spark a broader banking sector meltdown. On Monday, US stocks were mixed, with banking shares taking a hit.

Other Asia Pacific banking shares also fell.

In Hong Kong, shares in Bank of China (Hong Kong) and Hang Seng Bank fell 3.7 per cent and 1.3 per cent respectively. Pan-Asian insurer AIA Group traded down 4.7 per cent.

In Tokyo, Mitsubishi UFJ Financial Group, Japan’s biggest bank, lost  8.4per cent. Sumitomo Mitsui Financial Group and Mizuho Financial Group both dropped more than 7 per cent.

In Seoul, KB Financial Group and Shinhan Financial Group fell 3.6 per cent and 2.5 per cent respectively.

In Shanghai, China Merchants Bank dropped 1.2 per cent and China Minsheng Banking Corp retreated by 0.3 per cent.

In Sydney, Macquarie Group pulled back by 3.1 per cent and ANZ Group was 1.5 per cent lower.