Japan's Nikkei trims losses after Credit Suisse liquidity measures

Keyence

16/03/2023 02:24

(Adds details)
    By Junko Fujita
       TOKYO/SINGAPORE, March 16 (Reuters) - Japan's Nikkei
share average  .N225  trimmed losses on Thursday, in another
volatile session after embattled Swiss lender Credit Suisse
announced plans to strengthen its cash position.
    The week has seen wild swings in Japanese banks, causing the
Nikkei to fall below 27,000 for the first time since Jan. 23, on
fears of contagion from the Silicon Valley Bank meltdown and
Credit Suisse's woes. 
    The Nikkei was last down 1.2%, with losses over the past
five days exceeding 7%.
    Credit Suisse said on Thursday it was taking "decisive
action" to strengthen its liquidity by exercising its option to
borrow up to 50 billion Swiss francs ($54 billion) from the
Swiss National Bank.
    The Nikkei index was last down 315.1 points at 26,914.38,
with banks  .IBNKS.T  down 4.15%. Among the biggest losers were
Sumitomo Mitsui Trust Holdings Inc, down 6.8% and Japan Post
Bank Co Ltd, down 5.5%.
    The broader TOPIX  .TOPX  index was 1.5% weaker at 1930.27. 
    Japan's banking sector has been hurt mainly by the losses in
Silicon Valley Bank's  SIVB.O  bond portfolio, which have drawn
attention to the risks for Japanese lenders' gigantic foreign
bond holdings, estimated to be carrying over 4 trillion yen ($30
billion) in unrealised losses.
    The shift in the global interest rate expectations has also
dashed bets on policy normalisation, and improved margins, any
time soon for Japanese banks.
    Shigetoshi Kamada, general manager at the research
department at Tachibana Securities, said the main players in
Japan's stock market were foreigners, and that explained the
contagion.
    "Investors are forced to sell Japanese stocks to book
losses. They have been buying value stocks, such as banks and
insurers since the beginning of the year, seeking high dividend
payouts and to take advantage of low price-book ratios," he
said.
    Including Thursday's fall, the banking sector index has
fallen by almost 17% over 5 days and 5% year to date.
    "Declines in Japan's banking stocks may be a reaction from
recent gains in their shares,"  said Takatoshi Itoshima, a
strategist at Pictet Asset Management. "...the fundamental
financial situation in Japan is different from that in the U.S.
and Europe." 
    
    

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Bonds are a huge part of Japanese banks' assets    https://tmsnrt.rs/3FJDAxV
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 (Reporting by Junko Fujita; Editing by Raju Gopalakrishnan)
 ((vidya.ranganathan@thomsonreuters.com; +65 6973 8261; Reuters
Messaging: Twitter:@Vid_Ranganathan))