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Global Financial Stocks Experience a $465 Billion Loss in Market Capitalization Following SVB Bankruptcy

Investors around the world have hit the sell button, reducing their investment in financial stocks after the bankruptcy of Silicon Valley Bank (SVB). As a result, the market capitalization of global financial stocks has lost a total of $465 billion, with stocks falling on various markets from the New York Stock Exchange to the Japanese stock market.

The MSCI Asia Pacific Financials Index has shed 2.7%, reaching its lowest level since November 2022, with Mitsubishi UFJ Finance shares dropping 8.3% in the Japanese stock market. Hana Financial Group also experienced a 4.7% decrease in the South Korean stock market, and ANZ Group Holding shares fell 2.8% on the Australian stock market. Similarly, financial stocks in the US have also declined due to the uncertainty surrounding the US banking crisis recovery plan, leaving investors unsure whether the plan will protect against the widespread impact of the SVB bankruptcy.

Despite these declines, Asian financial firms are not seen as sectors that are directly at risk of SVB bankruptcy. However, the overall market capitalization of global financial firms listed on the MSCI World Financials Index and the MSCI EM Financials Index fell by approximately $465 billion in just three days.

The US government shut down SVB Bank on March 10 after SVB’s share price plummeted, and concerns arose that SVB may need to raise significant capital to offset huge losses from the sale of US Treasury bonds. SVB has had to sell bonds at below face value because bond prices fell against the rising interest rates following the Fed policy, and startups in the technology sector withdrew their deposits from SVB. The Fed has aggressively raised interest rates to curb inflation, but this acceleration has affected the liquidity of the business sector, including startups in the technology sector, which are an essential customer base for SVB.

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