Hong Kong stocks tumbled as the turmoil surrounding Credit Suisse and bank failures including Silicon Valley Bank infected markets in Asia-Pacific. Investors are wary of potential surprises from the Federal Reserve amid conflicting bets on the US rate outlook.
The Hang Seng Index fell 1.46 percent to 19,255.39 as of 10.34am local time to approach a three-month low. The Tech Index lost 0.31 percent while the Shanghai Composite Index retreated 0.52 percent.
Banks led losers in early trading. HSBC slipped 3.2 percent to HK$53.40, while its subsidiary Hang Seng Bank declined 2.1 percent to HK$115.10. ICBC weakened 0.5 percent to HK$4.22. Insurer AIA Group lost 5 percent to HK$76.50 and peer Ping An Insurance slid 4.2 percent to HK$50.10.
What moved the Hang Seng Index?
Most Asia-Pacific markets were lower. Japan’s Nikkei dropped 1.3 percent, Australia’s ASX S&P 200 fell 1.4 percent and South Korea’s Kospi slipped 0.4 percent.
Credit Suisse said it will borrow 50 billion Swiss francs (US$53.7 billion) from Swiss National Bank to fend off a crisis, increasing its chances of survival after the central bank stepped in to provide liquidity. Earlier, Credit Suisse’s shares slumped to a record-low in Zurich while the cost to insure the bank from default rose to distressed levels.
Stresses in the banking sector this month have prompted rate traders to rein in bets on a 50-basis point hike by the Federal Reserve at its March 21-22 policy meeting. While Goldman Sachs called for a pause, there is still more than an even chance of a quarter-point rise according to Fed fund futures.
Chinese tech stocks also weakened, with Tencent losing 0.41 percent to HK$343.20 and chip maker SMIC dropping 0.2 percent to HK$17.40.