As global stocks fall, Asia-Pacific's benchmark index erases all of its gains for 2023

In January, the index entered a bull market during the second trading week of the year, fueled by optimism from China’s reopening.

MSCI’s broadest index of Asia-Pacific shares outside Japan meanwhile traded 1.47% lower Tuesday afternoon, also marking new lows for the year. Last month, traders saw room for the index to rally further despite near-term volatility.

Markets continued to see sharp losses Tuesday on concerns of a spillover effect from Silicon Valley Bank’s collapse, even after U.S. regulators stepped in to protect depositors over the weekend.

“Concerns of a global economic rout continue to put pressure on the region, which are more value-focused,” IG analyst Yeap Jun Rong said in a Tuesday note.

On Tuesday, bank stocks in Japan declined sharply, weighing on the wider Topix, which led the sell-off in Asia-Pacific. The index closed 2.7% lower as financials dipped 4.65%, Refinitiv data showed.

Tokyo-listed shares of Mitsubishi UFJ Financial Group fell 8.59%, Sumitomo Mitsui Financial Group shed 7.57% and Mizuho Financial Group dropped 7.14%. Technology giant SoftBank Group also saw losses of more than 4%.

Yeap also noted indexes such as the Straits Times Index in Singapore has close to 45% of its weightage in bank stocks. Shares of DBS, United Overseas Bank and Oversea-Chinese Banking Corporation led declines Tuesday.

On Monday, the Monetary Authority of Singapore said its exposure to failed U.S. banks was “insignificant.”

“Banks in Singapore are well-capitalized and conduct regular stress tests against interest rate and other risks,” it said, adding that their liquidity positions are healthy and supported by a “stable and diversified funding base.”