HONG KONG: Asian markets rallied on Monday with financials up on easing fears about the future of German giant Deutsche Bank after a source said it was nearing a deal to slash a multi-billion-dollar US fine.
Traders fled for cover last week, sending stocks reeling Friday, after US officials slapped the lender with a $14 billion charge over its role in the subprime mortgage crisis.
The gigantic figure fuelled fears the bank could go under and spark another global financial downturn, while Bloomberg News said several hedge funds had withdrawn their investments in the firm—though the company said it was in a “stable financial position”.
However, on Friday, a person familiar with the matter told Agence France-Presse that the German bank is near an agreement to pay a much more manageable $5.4 billion to resolve the case.
“A lot of the market sentiment has improved because obviously people were worried that Deutsche Bank might be going to recreate the Lehman moment,” Andrew Sullivan, managing director for sales trading at Haitong International Securities Group in Hong Kong, said referring to the US bank whose fall precipitated the financial crisis.
“The fact that actually Deutsche Bank came out and said it’s well capitalized and that it’s close to securing a deal with US Department of Justice over that fine has just given the market more confidence that we’re not going to have another breakdown in the global banking system,” he told Bloomberg News.
In Japan, the Nikkei ended 0.9 percent higher, with investors brushing off the closely watched Tankan survey showing Japanese business confidence at its lowest in three years.
Hong Kong gained 1.2 percent, Sydney closed 0.8 percent higher and Jakarta put on 1.3 percent. There were also strong gains in Taipei and Manila. The advance tracked a rally on US and European markets.
Investors also welcomed the weekend release of a gauge of Chinese factory activity that indicated continued improvement in the world’s number two economy.
Among the main winners were banks, with Sydney-listed Commonwealth Bank up 1.5 percent, while HSBC was up 1.6 percent in Hong Kong. Mitsubishi UFJ Financial Group added 0.4 percent in Tokyo.
Shanghai, Seoul and Kuala Lumpur were closed for public holidays.