SVB bankruptcy wipes out $500 billion in financial stocks

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The financial sector has

US Government Issues Emergency Statement

In response to the bankruptcy of the SVB, the US government has issued an emergency statement guaranteeing all deposits and creating a new support fund. However, this did not prevent investor anxiety from spreading to other financial institutions.

Small Banks Also Affected

First Republic Bank (FRB), a small provincial bank that was experiencing a liquidity crisis, secured new funding from the Fed and JP Morgan Chase, but it was not enough to soothe investor anxiety. As a result, the stock prices of small and medium-sized regional banks, which are in a similar situation to the FRB, plummeted. Western Alliance Bank Corp. fell 47%, and Pac West Bank Corp. tumbled 21%. These stocks have also been suspended from trading on several occasions, causing the regional bank index to plunge 7.7%.

Large Banks Also Suffer

Not only were small and medium-sized regional banks affected, but stocks of large banks also plummeted. JP Morgan Chase, Citigroup, and Wells Fargo, which are representative US banks, all plunged around 5%. As a result, the financial sector of the S&P 500 closed down 3.78% on the day.

Asian Markets Follow Suit

Financial stocks in Asian stock markets are also plummeting. On the morning of the 14th, Mitsubishi UFJ Financial Group fell by 8.3%, Korea's Hana Financial Group by 4.7%, and Australia's ANZ Group by 2.8%. As a result, the MSCI Asia-Pacific Financial Index fell 2.7%, the lowest since November 29 last year.

US Government's Actions Questioned

Despite the US government's actions, the sharp drop in financial stocks is seen as a sign of doubts about whether the US government will be able to prevent further fallout from the collapse of the SVB.

Analysts Weigh In

Francis Chan, an analyst at Bloomberg Intelligence, an economic research institute of Bloomberg News, said in a report that day, "North Asian banks have solid deposits, abundant liquidity and well-structured portfolios." He predicted that they "will not" suffer the same fate as the SVB.

Conclusion

The SVB bankruptcy has caused global financial stocks to lose a significant amount of value, affecting both small and large financial institutions. The US government has taken emergency measures to address the situation, but investors remain doubtful about their ability to prevent further fallout. The situation is also affecting Asian markets, but some analysts believe that not all banks will be affected equally.

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