Asia markets, banks, Europe, USA, bailouts

Former Reserve Bank of India Governor Raghuram Rajan believes it is still too early to say whether the US bailout plan to stem the risk of bank contagion has worked.

“I think what’s happened so far, in terms of the rescues, is kind of done the first aid. The question is — is there a slow bleed that’s still going on,” he told CNBC’s “Street Signs Asia. “

“My sense is that we won’t know if the Fed has been successful in this rescue mission until a few weeks have passed and we don’t see any more problems.”

Rajan, now a professor of finance at the University of Chicago Booth School of Business, noted that questions remain surrounding the collapse of Silicon Valley Bank.

“There are a lot of questions to be answered here,” he said. “How can it be that a medium-sized bank was not aware of the interest rate risk?”

He added that regulators need to rebuild confidence in small and medium-sized banks, and that means “signaling very clearly that the banks with problems have been taken care of, and I think we’re not there yet.”

—Sumathi Bala

Japanese automaker Mazda announced that Masahiro Moro will be nominated as its new president and CEO.

The nomination will be subject to shareholder approval and approval from the company’s board of directors, which is scheduled to take place in June.

He will replace current president and CEO Akira Marumoto, who will step down if approval is obtained for Moro.

Moro, who has been with the company since 1983, currently serves as a director and senior managing director and previously served as managing director of Mazda’s North American operations.

Shares in Mazda fell 2.06% on Friday, leading losses among major Japanese automakers.

The Hang Seng Index led gains in the Asia-Pacific region on Friday, driven in part by gains in technology stocks.

Baidu rose nearly 12% after its US-listed shares surged overnight following the launch of its Chinese-language ChatGPT alternative – named Ernie bot.

Shares in streaming platform company Bilibili also rose nearly 8% in early trade.

The HSI itself rose 1.21%, while the tech-heavy Hang Seng Tech index was 3.13% higher.

— Lim Hui Jie

New Zealand will ban TikTok for devices with access to the parliamentary network, Reuters reported, citing parliamentary services chief Rafael Gonzalez-Montero.

Gonzalez-Montero told Reuters in an email that the decision was made after consultation with cybersecurity experts and discussions within the government.

The move comes after CNBC confirmed reports that the US has asked TikTok’s Chinese parent company Bytedance to divest its stake in the app or face a possible US ban. The United Kingdom also announced plans to ban the video app on public devices.

—Arjun Kharpal, Jihye Lee

Indonesia’s central bank has maintained its 7-day reverse repo rate at 5.75% and its lending rate at 6.5%.

In a statement, the bank explained that the decision is “consistent” with its monetary policy stance to ensure lower inflation expectations and inflation.

The central bank aims to bring core inflation back to a range of ±1% from 3% in the first half of 2023 and headline inflation to the same range in the second half of the year.

The Indonesian rupiah traded flat against the US dollar at 15,375 on Friday after the announcement.

— Lim Hui Jie

The Japan Center for Economic Research said the consensus forecast for the economy’s wage growth in 2023 was raised to 3.05% in March from an expected increase of 2.85% seen in January.

This would mark the strongest growth seen in Japan since 1994, the Nikkei reported.

In the research survey, most of the respondents revised their estimates upwards on the total wage and base salary component, the release showed.

Japan’s shunto wage negotiations were concluded on Wednesday, Reuters reported – marking the biggest wage increases not seen in decades as inflation levels rise.

– Jihye Lee

The Chinese technology company Baidu on Thursday unveiled its ChatGPT rival, called Ernie bot in English.

Shares closed 3.8% higher in the US, in contrast to a steep drop of nearly 6.4% in Hong Kong trade on Thursday.

Baidu’s Ernie bot operates primarily in Chinese, although the chatbot can also understand English. The company’s business partners were given priority in initial access to the Ernie bot.

Home prices in China rose 0.3% in February compared with January but fell 1.2% from a year ago, according to Refinitiv data from 70 cities from the National Bureau of Statistics.

Month-on-month house prices rose at the fastest pace since July 2021 as investors look forward to more accommodative policies from the government. In January, prices rose 0.1% on a monthly basis.

Data from 55 cities reported increases in new home prices in February, compared with 36 cities that reported an increase in January.

– Jihye Lee

Singapore’s non-oil domestic exports fell 15.6% in February from a year ago – less than expectations for a 16% drop. In January, the reading fell 25% year-on-year.

Compared with a month ago, non-oil domestic exports fell 8%, more than expectations for a 0.5% drop. The monthly reading rose slightly in the previous month by 0.9%.

Non-oil domestic exports for Singapore’s top 10 markets as a whole fell in February 2023, based on government data – particularly to the EU, Hong Kong and Taiwan, while exports to the US, Japan and Thailand rose.

– Jihye Lee

Tesla has long been an investor favorite for exposure to the transition to electric vehicles, but not everyone is convinced. Berkshire Hathaway-backed BYD, for example, is often touted as a better bet than Tesla.

Ray Wang of Constellation Research believes that Tesla versus BYD “will truly be a story for the ages.”

Professional subscribers can find out which stock is his favorite here.

— Zavier Ong

South Korea said Japan has agreed to lift export restrictions on three semiconductor materials to Seoul, the Ministry of Trade, Industry and Energy said in a statement.

Seoul also said it will drop its dispute against Tokyo with the World Trade Organization when the repeal takes place, the ministry said.

In 2019, Japan removed South Korea from its “white list” of preferred trading partners after South Korean court rulings ordered Japanese firms to compensate wartime forced laborers.

– Jihye Lee

The European Central Bank followed through on the 50 basis point interest rate hike it had flagged at its previous meeting, despite continued volatility in the banking sector.

Markets had reduced bets on the rise after severe sell-offs in European bank shares over the past week.

That takes the bank’s prime rate to 3%.

Eurozone overall inflation is running at 8.5%, which is well above the central bank’s target of 2%.

“The heightened level of uncertainty reinforces the importance of a data-driven approach to the Governing Council’s policy rate decisions, which will be determined by its assessment of the inflation outlook in light of incoming economic and financial data, the dynamics of underlying inflation, and the strength of monetary policy transmission,” the ECB said in its decision.

Read more here.

– Jenny Reid

The potential deposit at First Republic being discussed by major U.S. banks has grown to $30 billion, reports CNBC’s David Faber.

The largest contributions would come from Bank of America, Wells Fargo, Citigroup and JPMorgan Chase at about $5 billion apiece. Morgan Stanley and Goldman Sachs will contribute about $2.5 billion each, the sources said. Truist, PNC, US Bancorp, State Street and Bank of New York will contribute about $1 billion each.

—Jesse Pound

Big Tech stocks rose on Thursday, drawing on fears of the broader banking crisis. Amazon shares rose 3.3%, while Google parent Alphabet gained 3%. Apple, Meta and Netflix also traded higher.

Strength in technology heavyweights pushed the major stock averages into the green in morning trade. Investors may flock to Big Tech to embrace their megacap safety while betting that the current turmoil will keep the Fed from raising interest rates, benefiting growth names.

– Yun Li

The turmoil in the banking industry puts the US economy at greater risk of a recession, according to Goldman Sachs.

The Wall Street firm raised its probability of a decline in the next 12 months to 35%, up 10 percentage points, “reflecting increased near-term uncertainty about the economic effects of stress in small banks,” Goldman economist Manuel Abecasis said in a client. note wednesday night.

Regional bank stocks took a beating compared to Thursday. The SPDR S&P Regional Banking ETF fell 3.7% in early trade.

-Jeff Cox

Sources told CNBC’s David Faber that a group of financial institutions — including Goldman Sachs, Citigroup and JPMorgan Chase — are in talks to put about $20 billion into First Republic.

The news comes after First Republic’s stock has taken a hit in recent days, triggered by the collapse of Silicon Valley Bank on Friday and Signature Bank over the weekend.

Shares of First Republic fell more than 30% earlier in the day. In early afternoon trading, however, the stock fell just 3.3% before being halted due to volatility.

— Jesse Pound, Fred Imbert