Banking crisis in the United States: the closure of Silicon Valley Bank continues to generate turbulence in the markets

The banking crisis unleashed in the United States after the closure and takeover by the government of Silicon Valley Bank (SVB) last Friday continues to generate turbulence in markets around the world.

After the collapse of the European stock markets on Monday, this Tuesday it was the turn of the Asian ones, which all opened with strong losses amid fears about their exposure to the bankruptcy of SVB. And they ended up closing in red.

The main index of the Tokyo Stock Exchange, the Nikkei, fell 2.19% on Tuesday, its lowest level in three months, after having touched 2.6% due to nervousness in the banking sector. Three of the largest Japanese banks, Mitsubishi UFJ, Mizuho and Sumitomo Mitsui, also posted sharp stock market falls.

The First Bank of Toyama collapsed 11.69%, the biggest drop of the day among the companies in the main section (those with the largest capitalization in the local stock market), without it having been disclosed if it has ties to SVB or the also bankrupt Signature Bank.

The Nikkei, the main index of the Tokyo Stock Exchange, fell on Tuesday to its lowest level in three months. Photo: AP

It was followed by the company Meiko Electronics, with a fall of 11.55%, and ACCESS, specialized in internet services, which lost 9.98% after revealing that its US subsidiary IP Infusion has a capital deposit of about 11.6 million dollars in SVB.

Despite the fact that the company assured in a statement that it considers that the impact of this event on its performance and finances will be “insignificant”, investors reacted pessimistically.

Concern

Tokyo’s financial markets are responding the worst to the bankruptcy of the two US financial institutions. While analysts don’t expect it to have a big impact in Asia, the situation has raised concerns over reminiscences with the Lehman Brothers bankruptcy.

Japanese Finance Minister Shunichi Suzuki insisted on Tuesday that Japan believes that the possibility of SVB’s bankruptcy affecting the Japanese financial system is low, and that the US authorities were taking action.

US President Joe Biden tried to calm markets after Monday’s financial meltdown. Photo: AFP

The other stock markets in Southeast Asia also ended the day in the red on Tuesday. The stock markets of Singapore, Indonesia, the Philippines, Vietnam, Malaysia and Thailand registered falls between 1.2 and 3.13%.

Slight rebound in European markets

After experiencing a sharp fall on Monday, the European stock markets were trading higher on Tuesday, with increases of around 0.25% in all the major markets except London.

At the opening, the stock market that rose the most was that of Frankfurt, with 0.37%, followed by that of Paris, with 0.27%; Milan, with 0.24%, and Madrid, with 0.05%.

For its part, the Euro Stoxx50, the index that includes the European companies with the largest capitalization, also registered a rise of 0.31%.

European markets opened this Tuesday with a slight rebound after the collapse on Monday. Photo: REUTERS

A bad move for HSBC

Shares on the Hong Kong Stock Exchange of HSBC, the largest bank in Europe, fell 5.06% on Tuesday, after the group announced the purchase of the British subsidiary of Silicon Valley Bank.

The company’s shares in London, where it is also listed, had lost 4.05% on Monday.

The drop in HSBC, one of the stocks with the highest market capitalization in the Hong Kong market, dragged down the financial sub-index (-2.59%), which in turn led the falls in the industry benchmark, the Hang Seng (- 1.83%), following the global trend of fear for the banking sector.

In a separate statement, also issued on Monday, the Bank of England said it had cleared the sale with UK regulators to “stabilise SVB UK, ensure the continuity of banking services, minimize disruption to the UK technology sector and support the confidence in the financial system.

The central bank confirmed that, after the operation, all the money that SVB UK clients had deposited in the entity “is safe” and that its operations will continue as normal.

“The UK banking system remains safe, sound and well capitalized,” the Bank of England stressed.

The British Minister of Economy, Jeremy Hunt, specified that the operation is a “private sale” that was carried out without the British “taxpayers” having to assume a public bailout.

Source: EFE and AFP

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