Most Asian markets decline amid Deutsche Bank concerns
The bank's shares touched a record low overnight amid news that 10 hedge funds had cut their exposure to it.
While most Asian stock market indices were trading lower on Friday (30 September), the Shanghai Composite was up 0.16% at 3,003.62 as of 5.58am GMT amid investor concerns over Deutshce Bank.
The shares of the German lender touched a record low overnight after news emerged that 10 hedge funds had cut their exposure to the bank after it was asked last month to pay $14bn (£10.8bn) by the US Department of Justice (DoJ) to settle civil claims. The claims were related to the bank's alleged mis-selling of residential mortgage-backed securities (RMBS) during the 2005-2007 period. Investors were reportedly concerned that this could push Deutsche Bank into a liquidity crunch.
Stuart Graham of Autonomous Research opined that while Deutsche Bank had its issues, liquidity was not one of them. "At the Q2 stage, Deutsche had a liquidity reserve of €223 billion and a Liquidity Coverage Ratio of 124 percent...We think [the bank] has a business model viability issue, but it does not have a near term funding problem," Graham was quoted as saying by CNBC.
In Asia, official data showed that Japan's core consumer price index declined 0.5% on-year in August, marking a sixth straight month of decline. Takashi Miwa, chief economist for Japan at Nomura, said: "Today's CPI numbers imply that we're still on the track for declining trend of inflation. So it's quite difficult to achieve the 2 percent [inflation] target, even under the new framework introduced last week by the Bank of Japan."
Indices in the region were trading as follows at 6.42am GMT:
Country | Index | Price | Up/Down | %Change |
Hong Kong | Hang Seng Index | 23,324.62 | Down | 1.75% |
Japan | Nikkei 225 | 16,449.84 | Down | 1.46% |
South Korea | KOSPI | 2,045.43 | Down | 1.13% |
India | CNX Nifty | 8,567.85 | Down | 0.27% |
Australia | S&P/ASX 200 | 5,435.90 | Down | 0.65% |
Overnight (29 September), the FTSE 100 closed 1.02% higher at 6,919.42, while the Dow Jones Industrial Average closed lower by 1.07% at 18,143.45.
Among commodities, oil prices declined amid scepticism over Opec's new plans to lower output. While WTI crude oil was trading lower by 0.96% at $47.37 a barrel, Brent crude was trading 1.06% lower at $48.72 a barrel as of 6.49am GMT.
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