Hong Kong, Mar 14 (IANS): Asian stocks fell broadly on Tuesday, dragged down by banking shares, as fears over the fallout of Silicon Valley Bank's collapse gripped the market despite US government efforts to stabilize the financial system, media reports said.
Japan's Nikkei 225 tumbled 2.19 per cent to post its third straight day of declines. Hong Kong's Hang Seng briefly dropped 2.5 per cent, before trimming losses in the afternoon. Korea's Kospi lost almost 3 per cent. China's Shanghai Composite shed 0.65 per cent, CNN reported.
Banks were the hardest hit sector across the region, CNN reported.
HSBC Holdings plunged more than 5 per cent in Hong Kong after the banking giant pledged to inject 2 billion pounds ($2.4 billion) of liquidity into SVB's UK unit, which it had bought for 1 pound, Standard Chartered Bank sank nearly 7 per cent, CNN reported.
The sell-off happened despite extraordinary measures by US regulators over the weekend to avert a potential banking crisis following the collapse of SVB. The California-based lender fell with astounding speed on Friday, marking America's biggest bank shutdown since 2008.
Investors are now on edge over whether the demise of SVB could spark a broader banking sector meltdown. On Monday, US stocks were mixed, with banking shares taking a hit, CNN reported.
"Investors fear other financial institutions are sitting on significant unrealized losses on their balance sheets because of markedly higher interest rates," said DBRS Morningstar analysts on Monday.
The fear was "irrespective of fundamentals", they said, CNN reported.
US Treasury yields were sharply lower on Monday as investors flocked to safe-haven assets. The yield on the 2-year Treasury was briefly down more than 50 basis points, the biggest daily drop in decades.
"At the moment, markets are speculating on a Fed's U-turn, but are equally pricing in a greater degree of contagion in the banking sector turmoil, which is ultimately weighing on risk sentiment," ING analysts wrote in a research note on Tuesday, CNN reported.