<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Bonds are a huge part of Japanese banks' assets ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Junko Fujita; Editing by Raju Gopalakrishnan and Rashmi Aich)
Messaging: Twitter:@Vid_Ranganathan)) By Junko Fujita
TOKYO/SINGAPORE, March 16 (Reuters) - Japan's Nikkei
share average trimmed losses on Thursday after hitting a
near two-month low in another volatile session after embattled
Swiss lender Credit Suisse announced plans to strengthen its
cash position.
The week has seen wild swings in Japanese banks, causing the
Nikkei to fall below 27,000 for the first time since Jan. 23, on
fears of contagion from the Silicon Valley Bank meltdown and
Credit Suisse's woes.
The Nikkei recovered some losses to end 0.8% lower at
27,010,61, after falling to as low as 26,632.92, its lowest
since Jan. 20.
Credit Suisse said earlier in the day it was taking
"decisive action" to strengthen its liquidity by exercising its
option to borrow up to 50 billion Swiss francs ($54 billion)
from the Swiss National Bank.
The banking sector pared losses but ended 3.26%
lower. Among the biggest losers were Sumitomo Mitsui Trust
Holdings Inc , down 6.27% and Japan Post Bank Co Ltd , down 5.2%.
The broader TOPIX index fell 1.17% to 1,937.10.
Japan's banking sector has been hurt mainly by the losses in
Silicon Valley Bank's bond portfolio, which have drawn
attention to the risks for Japanese lenders' gigantic foreign
bond holdings, estimated to be carrying over 4 trillion yen ($30
billion) in unrealised losses.
The shift in the global interest rate expectations has also
dashed bets on policy normalisation, and improved margins, any
time soon for Japanese banks.
Shigetoshi Kamada, general manager at the research
department at Tachibana Securities, said the main players in
Japan's stock market were foreigners, and that explained the
contagion.
"Investors are forced to sell Japanese stocks to book
losses. They have been buying value stocks, such as banks and
insurers since the beginning of the year, seeking high dividend
payouts and to take advantage of low price-book ratios," he
said.
Including Thursday's fall, the banking sector index has
fallen by almost 17% over 5 days and 4% year to date.
"Declines in Japan's banking stocks may be a reaction from
recent gains in their shares," said Takatoshi Itoshima, a
strategist at Pictet Asset Management. "...the fundamental
financial situation in Japan is different from that in the U.S.
and Europe."
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