Published: 20 March 2023
11 March 2023
Silicon Valley Bank (SVB), the 16th largest bank in US collapsed due to a bank run, as depositors withdrew cash & SVB could not meet their obligations.
This affected the startups and tech companies in the Silicon Valley area, which were the main customers of SVB.
Silicon Valley Bank is largest failure since 2008 financial crisis, billions stranded
This stoked concerns and volatility in US and global banking stocks, including in Singapore, where the Monetary Authority of Singapore (MAS) reassured the public that the local banking system remains “sound and resilient”.
Implications:
• Singapore investors who invested in funds or ETF which had significant exposure to SVB will be affected.
• Singapore Venture capital firms with portfolio companies that bank with SVB and other affected banks could see some impact.
Fall of Silicon Valley Bank: The broader implications and why they matter to S’pore
15 March 2023
The global banking contagion further worsened investor’s confidence in Credit Suisse.
On Sunday (Mar 19), UBS offered to buy Credit Suisse for as much as US$1 billion with a price of 0.25 francs a share to be paid in stock.
Implication:
This greatly affected Credit Suisse 5.625% perpetual bonds, which were sold to private banking clients in Singapore.
Credit Suisse perpetual securities’ prices fall to distressed levels
Credit Suisse says US$17 billion of its debt now worthless, angering bondholders
This week, the Fed is expected to raise the federal funds rate by a further 25 basis points – to 4.75-5 per cent.
Market watchers expect the current turmoil in the US banking sector to reduce the likelihood of further rate hikes in the months ahead, and increase the chances of rate cuts before the end of the year. Indeed, US inflation already appears to be abating.
The recent instability on the US banking system may be a blessing in disguise.
Lesson from Silicon Valley Bank – even risk-free assets are worth less after interest rates rise
Start a regular investment plan
Splitting up your lumpsum over the next 6-12months or even monthly regular investments would be best to take advantage of the current equity markets volatility; for your wealth accumulation needs.
Invest for the long term
Uncertainty in the equity market can cause short-term fluctuations in stock prices. However, historically, the stock market has always recovered over the long term.
Look out for financial products with downside risk protection
One example is the Indexed Universal Life, which has the following benefits:
As always, we will be here to guide you through the ups and downs of your investment journey.
Do feel free to reach out to me at winniechan@fapl.sg if you have any queries on your financial portfolio!
Important: The information and opinions in this article are for general information purposes only. They should not be relied on as professional financial advice. Readers should seek independent financial advice that is customised to their specific financial objectives, situations & needs. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.
Winnie Chan is a distinguished Certified Financial Planner (CFP) with over a decade of expertise in financial advisory services. Her commitment to her clients has led many to achieve their financial aspirations while ensuring their families’ protection. Winnie‘s extensive experience in insurance claims has been instrumental in securing successful payouts, providing crucial financial relief during challenging times.
Her passion for community engagement is evident through her financial education initiatives. She has conducted insightful financial talks for esteemed organizations such as Carousell Group, Singapore National Eye Centre and Singtel, empowering their employees with valuable financial knowledge.
Outside of her professional commitments, Winnie balances her life with a passion for fitness and music. She enjoys rigorous workouts at the gym and is a pianist, recently awarded ABRSM Piano Performance Grade 6 (Merit).
