While Asia has, so far, been largely unaffected by the collapse of U.S. banks including Silicon Valley Bank, as well as by UBS' takeover of Credit Suisse, money managers have still had to calm clients about the risk of contagion.
Sources said clients have needed reassurance regarding the risk of bank closures in the Asia-Pacific region and about their investment exposure to the affected banks. Regulators across the region, meanwhile, have rushed to keep confidence levels from dipping over concerns about the resilience of their respective banking systems.
"In Hong Kong, the general view seems to be that we are mostly unaffected by the bank collapses, but there are a few (high net worth individuals) and (hedge funds) that are probably taking big losses on their AT1 holdings," said Stewart Aldcroft, a Hong Kong-based independent asset management consultant.
As far as he knows, there has been no data or evidence to suggest that any bank in Asia-Pacific is at risk of a collapse.
It is a sentiment shared by others in the region. Singapore-based Sue Trinh, co-head of the global macro strategy at Manulife Investment Management, believes that direct exposure to ailing banks remains low and that Asian banks have strong enough liquidity coverage ratios. Manulife IM has $442 billion in assets under management.
"Direct exposures to failed banks appears to be limited at this moment," she said in an emailed response to questions on Wednesday. Asia stands out for multiple reasons including "widening growth differentials, benign inflation in aggregate, some Asian (corporate banks) pivoting dovishly and asymmetric risk to the upside for non-resident capital inflows."
In emailed commentary earlier in the day, Ms. Trinh wrote that banks in the region are well capitalized, liquidity coverage ratios are high and deposit bases tend to be sticky. She added that current account deficits in Asia are benign except for New Zealand, the Philippines and Thailand, where deficits exceed 3% of GDP. However, "although there are signs of strain, most measures remain far below crisis levels," she wrote.
"Far more important to the Asian regional outlook is the event's impact on global growth, USD funding conditions, and USD strength. If the global economy manages to avoid a hard landing, and USD funding costs remain low (with the USD staying below its 2022 peak), Asia should be able to weather the storm," she wrote.