Dhe fear of contagion effects in view of the troubled Credit Suisse is weighing on the share prices of major European banks. Deutsche Bank stocks fell by more than 7 percent at the beginning of the week, and Commerzbank by more than 5 percent. The Dax started Monday trading with a slight minus. “The stock exchanges are trying to evaluate and praise the rescue of Credit Suisse,” said portfolio manager Thomas Altmann from asset manager QC Partners. On the positive side, it is quite clear that the authorities are doing everything they can to help banks like Credit Suisse and secure deposits. On the other hand, investors can see how quickly shares in troubled banks can become almost completely worthless.
France’s central bank chief Francois Villeroy de Galhau expressed confidence in the stability of the French financial institutions after the rescue operation for Credit Suisse. “To put it bluntly once again: French banks are solid,” the European Central Bank (ECB) councilor told the daily Le Monde.
The French banking sector is concentrated around six large banks. Villeroy said they all have solid and profitable business models, strict risk controls and a high degree of regulatory compliance. And he added: “As for Credit Suisse, this is a bank that has had problems with its business model and profitability for several years, as well as with insufficient internal controls.” to bind UBS. That is a welcome solution.
On the other hand, German government bonds, which are considered to be fail-safe, recorded price gains. Ten-year stocks returned 1.936 percent, their lowest level in three months.
Most of the major Asian stock exchanges fell on Monday. However, the losses were limited after it had already gone downhill significantly in the past week. Japan’s Nikkei 225 closed 1.42 percent lower at 26,945.67 points on Monday. The situation was similar for the Australian S&P ASX 200, which closed 1.38 percent down at 6898.50 points. The Hang Seng index of the Chinese special administrative region of Hong Kong, where foreign investors are also allowed to trade, recently even went down by 3.37 percent to 18,861.23 points. The mood for the banks remains shaky: shares in Hong Kong-listed bank HSBC lost more than 6.5 percent.
The CSI 300 index with the 300 most important stocks from the Shanghai and Shenzhen trading centers held up comparatively well, having recently lost less than the other indices. It only gave way by 0.50 percent to 3938.89 points. The stock market barometer benefited from the fact that the Chinese central bank surprisingly lowered the minimum reserve ratio for domestic banks on Friday.
