Markets have been volatile this week following the collapse of Silicon Valley Bank (SVB) in the US. SVB lent money to many small technology businesses in the US, as well as their entrepreneurial owners. The US Federal Reserve stepped in quickly to secure customers’ deposits and reassure markets. In the UK, HSBC bought up the UK arm of SVB.
However, markets have been rattled by the failure of SVB with memories of the Global Banking Crisis of 2008-09 and the potential risk of contagion and a domino effect amongst banks. This has resulted in large falls across global markets, with banks particularly hard hit, especially smaller regional banks in the US and Europe.
Most notably, it has emerged that Credit Suisse is a casualty of this crisis, its shares and bonds declining steeply, before recovering some losses as the Swiss central bank committed to lend it $54bn in an attempt to boost liquidity and calm investors.
Today, markets have stabilised as investors have recognised that central banks have acted quickly to isolate potential flash points and provide support to key market participants.
Seabrook Clark has no direct exposure in its portfolios to SVB, small US or European regional banks and a below average exposure to larger banks in client portfolios. As such, providing the stability of the financial regime amongst banks is maintained, which is the clear aim of authorities and regulators, it is anticipated that this is a short-term crisis which should be resolved, enabling markets to recover given time.
Please note, this article does not constitute investment advice. Past performance is not necessarily an indication of future returns; the value of investments and any income from them is not guaranteed and can fall as well as rise. Overseas investments are affected by currency movements and exchange rates. If you would like investment advice on your individual circumstances, please do not hesitate to get in touch, telephone 01392 875500, info@SeabrookClark.co.uk