.png)
.jpg)
>
.jpg)
.jpg)
www.investors.com
SVB Bank Collapse Sends Shock Waves Across Europe, Asia
The collapse of SVB Bank sent aftershocks overseas, with concerns about a wider fallout from Silicon Valley Bank and the U.S. banking sector dominating news headlines across Europe and Asia.
SVB Bank Collapse Fallout In Europe
Over the weekend, the Bank of England seized control of SVB UK after its collapse, which followed a bank run on its U.S. branch.
The failure threatened thousands of British tech companies and investors who rely on the startup focused SVB UK as their bank of choice, the U.K.'s Telegraph said.
Early Monday, HSBC UK agreed to buy the United Kingdom arm of Silicon Valley Bank for 1 pound sterling ($1.21) after all-night talks. HSBC will also take over the banking unit's debt.
The strategic purchase will strengthen HSBC's access to "innovative and fast-growing firms, including in the global technology and life-science sectors, in the U.K. and internationally," CEO Noel Quinn said in an exchange filing.
Meanwhile, British Prime Minister Rishi Sunak said there was "no systemic contagion risk" following the SVB collapse. The Silicon Valley Bank fiasco will not trigger a new financial crisis, he added.
In Europe, Reuters reported the central bank convened its crisis team on Monday to assess the possible fallout on the local market, though no emergency action is foreseen.
The FTSE 100 fell 2.2% in Monday trading, with banks extending last week's losses after the SVB collapse.
U.K. banks in the more domestically focused FTSE 250 fell 2.5%, after losing more than 6% last week.
HSBC shares dropped 3.5% after revealing it will acquire the UK subsidiary of SVB for £1.
European stocks in the Stoxx 600 index fell 2.5% Monday, led by a sharp decline for bank stocks.
Silicon Valley Bank Failure Rocks Asia
In China, the SVB collapse rocked the country's tech startups and venture capital firms, the South China Morning Post reported.
Chinese biotech firm BeiGene said it had 3.9%, or about $175 million, of its $4.5 billion cash locked up in SVB. Other companies including Zai Lab, Sirnaomics, MobVista and Noah Holdings reported some exposure in the biggest U.S. bank failure since the 2008 financial crisis.
And after HSBC U.K. swooped in to buy SVB Bank's U.K. arm, the bank's China subsidiary may be taken over by its Chinese partner, Shanghai Pudong Development Bank, sources told SCMP.
On Monday, Asia-Pacific stocks traded mixed.
China's Hang Seng Index and the Shanghai Composite rose nearly 2% and 1.2%, respectively. But Japan's Nikkei 225 fell 1.1%.
.jpg)
Japanese banks slide as SVB contagion fear rattles markets
.jpg)
Asia's share markets slid on Tuesday, with Japan's financial stocks leading losses as fear of a US banking crisis gripped investors ahead of crucial inflation data due later in the day.
Fallout from the collapse of US lenders Silicon Valley Bank and Signature Bank widened overnight, despite government efforts to shore up confidence. Heavy selling hit US regional bank stocks and traders raced headlong from bets on US rate hikes, reckoning the Fed would now be thinking twice.
Two-year Treasuries had their biggest rally since 1987, and US interest rate futures soared - with markets pricing out any chance of a 50 basis point rate hike next week and baking in nearly 70 bps of cuts by year end.
On Tuesday MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.5% in early trade, with financials in Australia dragging the most.
SPOTLIGHT
Japan's Nikkei dropped 2%. The Tokyo Stock Exchange's banks index fell 7.4% in early trade, putting it on course for its steepest drop in three years.
"Bank runs have started (and) interbank markets have become stressed," said Damien Boey, chief equity strategist at Sydney-based investment bank Barrenjoey.
"Arguably, liquidity measures should have stopped these dynamics but Main Street has been watching news and queues – not financial plumbing," he said. "Fear has started to feed on itself, and higher uncertainty by itself has triggered its own de-leveraging and de-risking dynamics."
Overnight the VIX volatility index, nicknamed Wall Street's "fear gauge", shot higher and other indicators of market stress showed early signs of strain. The S&P Banking Index fell 7%, its largest one-day percentage drop since June 2020.
Big bank shares including J.P. Morgan, Citigroup, and Wells Fargo all lost ground, but regionals were hit hardest with First Republic Bank down 62%, Western Alliance down 47% and PacWest down 21%.
In Tokyo, Resona Holdings led losses with a 9% slide, followed by Sumitomo Mitsui Financial Group, down 8%.
President Joe Biden sought to reassure depositors by vowing to ensure the safety of the US banking system and the Fed on Sunday announced a new funding mechanism to help banks find ready cash.
Banks can now borrow against the par value - and not the lower market value - of their bond portfolios.
Elsewhere, the dramatic re-pricing of US rate expectations has knocked the US dollar lower.
It was last hovering around 133.25 yen and $1.0718 per euro.
Nerves have capped oil prices, with Brent crude futures LCOc1 pinned near $80 a barrel.
US inflation data due later in the day is likely to inject more volatility, even if investors see the Fed prioritising financial stability.
"The prospect for the market to 'look through' strong US data in the current environment could reduce upside US dollar risk through (the) CPI, which would mark a significant departure from the fully data-dependent environment in place as recently as a few days ago," said NatWest Markets strategist Jan Nevruzi.
TOP STORIES
.jpg)
.jpg)
.jpg)
.jpg)
.jpg)
.jpg)
.jpg)
.jpg)
.jpg)
.jpg)
.jpg)
.jpg)
.jpeg)
.jpeg)
.jpeg)
.jpeg)
.jpeg)
.png){kind=logo}
