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It's getting ugly

11 Mar 2023

Silicon Valley Bank & Silvergate Bank collapse, and SATS rights issue

The US stock market had a tough week with heavy selling seen in the banks. 

The collapse of Silicon Valley Bank led to concerns about a contagion impact to the broader financial sector.

We take a look at what led to Silicon Valley Bank’s collapse and what to look out for from here.  

If you’re looking at no-frills deposit accounts to park your spare cash amidst the uncertain outlook, do check out our recent reviews of CIMB FastSaver, Stanchart JumpStart and UOB Stash accounts. 

Also, join us in a upcoming seminar jointly organised by Nikko Asset Management, DBS and SGX on 18 March to find out more about what investing strategies could work in today's market environment. 

Source: Bloomberg. Price as of market close on 10 March

💸 Another one bites the dust 

What happened? 

Silicon Valley Bank (SVB), a US bank which served mainly tech startups, was closed by US regulators in the largest bank collapse since 2008. 

What does this mean?

The collapse of SVB reflects challenges faced by businesses with higher interest rates. However, some of the difficulties faced appears to more acute for SVB.

If banks were to become more conservative following this episode, there might be further slowdown in the economy. 

There are already expectations that the Fed might be less aggressive on its interest rate hikes following the collapse of SVB. 

Why should I care? 

The share prices of US banks fell sharply with the news of challenges faced by SVB. The KBW Bank Index, which tracks the performance of leading banks in the US, fell 16% in the past week as concerns grew over the collapse of SVB.

However, the impact on the economy will still depend largely on whether a buyer will emerge to buy over SVB. 

Read our full analysis here

Investing in the KBW Bank Index?

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Webull Number 1 app.jpg


🚗 WHAT'S MOVING

  • Tesla (TSLA) has cut prices on its two most expensive models in the US, the model S and model X, in a renewed attempt to increase demand for its cars.
  • Sea reported its first ever profit of $427 million in the fourth quarter, helped by drastic cost reductions. Analysts expected a loss of $434 million on average. Sea’s revenue also exceeded estimates, rising 7.1% to $3.5 billion.
  • Grab Chief Financial Officer Peter Oey sold 341,000 shares in the company at US$3.17 per share. Grab explained in a statement that the move was made to cover the CFO’s tax obligations. 

Source: Bloomberg, CNBC, Financial Times, Business Times, Edge Singapore

 


💡 THE BIG IMPORTANT STORY

SATS rights issue – What should investors do?

 The SATS rights issue will offer entitled shareholders the right to buy 323 shares at $2.20 each for every 1,000 shares owned.

SATS rights issue 2023.jpg

 


🤓 WHAT WE’RE LOOKING OUT FOR THIS WEEK

Source: Bloomberg, SGX 

 


🍭 THAT’S INTERESTING

A four-bedroom apartment at The Marq on Paterson Hill was leased at S$100,000 a month starting from October 2022, reflecting soaring rentals for luxury properties in Singapore. This was higher than a S$80,000 a month lease for a unit at Eden in Draycott Park signed in February 2022. 

Source: Business Times

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