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:
|Hong Kong||Hang Seng Index||23,324.62||Down||1.75%|
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.