Asian Stock Exchanges Open Enthusiastically, Has the Banking Crisis Disappeared?

Jakarta, Reportase – Asia-Pacific stock exchanges opened higher in trading on Tuesday (21/3/2023), amid market optimism that the global banking crisis can subside.

Hong Kong’s Hang Seng Index opened up 0.81%, China’s Shanghai Composite rose 0.18%, Singapore’s Straits Times jumped 1.04%, Australia’s ASX 200 soared 1.26%, and South Korea’s KOSPI gained 0.52%.

Meanwhile, Japan’s Nikkei 225 index and the Japanese financial market are not open today because they are on holiday to commemorate the Spring Equinox Day.

From South Korea, annual exports decreased in February, where exports fell to 17.4% (year-on-year/ yoy). It’s not just exports that have slumped, South Korea’s imports last month also slumped, namely to 5.7% (yoy).

Exports for the first 20 days this month reached US$ 30.9 billion, while imports reached US$ 37.3 billion.

In detail, exports to the United States (US) increased by 4.6% compared to the same period last year, while exports to China experienced the largest decline of 36.2%, followed by Vietnam with a decrease of 28.3%.

Meanwhile, imports from China and Taiwan rose 9.1% and 14.1% respectively, while the biggest decline in imports was seen from Australia with a 24.7% drop.

Following this announcement, the South Korean won was not strong against the US dollar, which weakened 0.18% to KRW 1,306.72/US$.

Asia-Pacific stocks tend to strengthen amid the bright return of the US stock market, Wall Street, in Monday’s trading. because market players hope that the crisis in the global banking sector can subside.

The Dow Jones Industrial Average (DJIA) closed up 1.2%, the S&P 500 shot 0.89%, and the Nasdaq Composite gained 0.39%.

This comes after a deal to bail out Credit Suisse and the central bank’s efforts to increase confidence in the financial system.

In addition, market players also hope that the attitude of the US central bank (Federal Reserve/The Fed) will become more lenient following the banking crisis that occurred in the US last week.

Banking stocks in the US were bright in yesterday’s trading, signaling a recovery from heavy losses throughout last week as the sector was forced to shore up their deposit base after the collapse of Silicon Valley Bank (SVB).

Although banking stocks in the US recovered, First Republic Bank’s shares fell 47%.

The plunge back in First Republic Bank shares came after S&P Global cut First Republic Bank’s rating, stoking concerns about the bank’s liquidity despite last week’s $30 billion rescue.

Instability in the US financial sector throughout last week has made market players change their views, from previously expecting the Fed to return to be more aggressive, to become more lenient.

The market now only expects The Fed to raise interest rates again by 25 basis points (bp), from the previous 50 bp.

Based on the latest CME Group data, market participants see a probability of 76%, The Fed will raise interest rates again by 25 basis points (bp). While the remaining 24% probability sees the Fed will not raise interest rates.

Meanwhile, last Sunday UBS agreed to acquire Credit Suisse worth US$ 3.2 billion or the equivalent of Rp. 49 trillion (exchange rate of Rp. 15,340). After the emergency rescue, the combined bank will have US$5 trillion in investable assets.

However, Credit Suisse shares still plunged 56% on Monday, while UBS shares rose from a loss to a 1.3% gain.

Following the acquisition of Credit Suisse, the Fed, the European central bank (ECB), and other major central banks such as the British central bank (BoE), the Japanese central bank (BoJ), the Canadian central bank (BoC), and the Swiss central bank (SNB) ) promised to increase market liquidity and support other banks.

CNBC INDONESIA RESEARCH

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