HSBC Holdings PLC, Europe’s biggest bank by assets, and Standard Chartered PLC fell in Hong Kong trading after Moody’s Investors Service said the turmoil in Cyprus may have negative implications for European bank ratings.
HSBC declined 2.3 percent, the most in almost six weeks, in Hong Kong. Standard Chartered, Britain’s second-largest lender by market value, slid 1.5 percent.
The MSCI Asia Pacific Financial Index lost 2.1 percent, heading for the biggest drop since July last year, as JPMorgan Chase & Co recommended betting against China’s biggest lenders.
European finance ministers reached an unprecedented agreement on Saturday forcing depositors in Cypriot banks to share in the cost of the latest eurozone bailout. Moody’s said the decision is negative for depositors in Europe and marks a significant step toward limiting systemic support for bank creditors in the region.
“From the social planning point of view and the idea of keeping depositor confidence in general, this is a terrible precedent to set,” said Jim Antos, a Hong Kong-based analyst at Mizuho Securities Asia Ltd. “People in Europe are probably going to think hard about how much money they should put in a tin can and bury in the back yard.”
Cypriot President Nicos Anastasiades, who bowed to demands by eurozone finance ministers to raise 5.8 billion euros (US$7.5 billion) by taking a piece of every bank account in Cyprus, appealed to the country’s lawmakers to ratify the levy yesterday.
“It is reasonable to expect that the deposit volatility in stressed sovereigns could rise,” Goldman Sachs Group Inc analysts led by Jernej Omahen wrote in a note to investors.
Still, any response from depositors in Italy, Ireland, Spain and Portugal would probably be limited as their “perception of banks has improved,” the analysts wrote.
Gareth Hewett, a Hong Kong-based spokesman for HSBC, declined to comment on its Cyprus operations.
Standard Chartered has no presence in the country and no direct sovereign exposure to Greece, Ireland, Italy, Portugal and Spain, said Doris Fan, a Hong Kong-based spokeswoman for the London-based bank.
HSBC’s gross on-balance sheet exposure to Cyprus was US$0.3 billion as of the end of last year, consisting primarily of loans to other financial institutions and companies, the London-based lender said in its latest annual report.
The bank’s US$2 billion of March 2022 securities offered a 132 basis-point spread, little changed from the previous trading day, Maxim Group LLC prices showed.
Standard Chartered’s US$2 billion of 3.95 percent bonds due January 2023 yielded 202 basis points more than Treasuries as of 11:35am yesterday in Hong Kong, little changed from Friday last week, ING Groep NV prices showed.
Moody’s said the support package for Cyprus reduces the immediate risk of a restructuring of its sovereign debt. European banks had US$39 billion in claims in Cyprus as of Sept. 30 last year, according to Bank for International Settlements data.
“While raising the risk of deposit flight out of peripheral banking systems, the agreement reflects euro area policymakers’ desire to avoid sovereign defaults in addition to Greece’s,” the ratings company wrote in its credit outlook.
Shares of Chinese banks declined as JPMorgan downgraded the country’s stock market to underweight and recommended bearish derivatives tied to its four biggest banks. Industrial & Commercial Bank of China Ltd (中國工商銀行), the country’s biggest lender by market value, dropped 3.1 percent in Hong Kong trading. China Construction Bank Corp (中國建設銀行), the third largest, fell 2.9 percent.
Rapid credit expansion, elevated property prices and a decline in potential growth have increased risks of a financial crisis in China, Nomura Holdings Inc said in a report on Friday last week.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the