Does the collapse of Silicon Valley Bank (SVB) have an impact on Vietnam’s stock market?

In terms of scale, SVB has only about 212 billion USD, and Lehman Brother in 2008 is 639 billion USD.

On the morning of March 10 (US time), Silicon Valley Bank (SVB) stopped operating. The SVB event marked the second-largest bankruptcy by a financial institution in US history, since 2008.

Acknowledging the impact of this event, analysts gave a view that was not too pessimistic when saying that a small scale like Silicon Valley Bank (SVB) would not have too much influence on the financial market.

Although the market does not yet know whether the failure of SVB will cause widespread risks to the financial system, this information makes investors quite confused. So how will the stock market react to this information?

Discussing this issue, Mr. Nguyen The Minh – Director of Yuanta Securities Vietnam said that in terms of both liquidity and scale, the SVB event was not enough to have a big impact on the financial market.

Firstly, in terms of liquidity, SVB’s credit-to-deposited ratio (LDR) is only 43%, much lower than that of major banks in the US, which is over 70%. Total assets of SVB are 212 billion USD, of which 165 billion USD are deposits.

According to statistics, they can arrange $ 95 billion to backup liquidity for the 2nd people to withdraw money, that $ 95 billion comes from $ 50 billion from government bond + $ 25 billion (commodities, CDS, … ), + $15 billion of their cash + nearly $5 billion from other refinances maturing quarterly. In short, there is about 58% of funds available to ensure short-term liquidity, but this can cause asset sell-off and cause big loss for SVB itself.

In terms of scale, SVB has only about 212 billion USD, and Lehman Brother in 2008 is 639 billion USD. Therefore, experts believe that SVB is still not strong enough to cause a crisis similar to 2008. MBS funds (similar to bonds) are estimated to be somewhere over 70 billion USD, calculated to be only close. 1 month Fed goes to buy MBS in QE package. This shows that the Fed has more than enough capacity to help this bank.

In addition, SVB’s share price fell by more than 60% in the session on March 10, but JPMorgan increased by 2.54%. This shows that many other big banks may be benefiting from the SVB case.

“In 2008, the Fed did not “rescue” Lehman Brother and then regretted it and admitted it was wrong, so it turned around in 2009 and pumped money to solve it. After this event, I predict that the Fed will lower its voice in policy management in the coming time,” said Mr. Nguyen The Minh.

Even if there is no systemic risk, the expert emphasized that SVB’s difficulty is a reminder that banks can find it difficult to generate profits even in the interest rate environment. increase.

Before the above analysis, Mr. Minh said that the possibility of psychological pressure causing the market to shake strongly in the early sessions of the week, but the trend will be more positive at the end of the week. Because the cash flow has recovered well in recent sessions, plus a lot of positive support information from foreign funds is also an important support. Besides, market breadth also tends to be better, many stocks discount relatively low. Therefore, investors can disburse exploration with a low proportion.

For his part, Mr. Bui Van Huy – Director of DSC Securities Branch also said that SVB is a local case and is a typical example of bad management of the Balance Sheet in the recession, not from any source of risk. Systematic risk and low probability can cause a knock-on effect.

Therefore, the market is likely to continue the accumulation process in the boundary with support around 1,020- 1,030, resistance around 1,070-1,080 . According to expert DSC, despite certain shaking and the market fluctuates from session to session according to new information, the general trend is still accumulation with the general price base of the market being established. The market performance is not too bad and there are investment opportunities with many specific groups.

The probability for VN-Index to rebound after the accumulation momentum (cumulative stock) or continue to retest the support lines (sell-off) occurs is 50/50. Investors should prepare capital, and suitable investment tactics for both cases.

However, the market divergence is a good signal for both scenarios – accumulation or sell-off. The indicator shows that the out-of-market cash flow is still waiting for opportunities to disburse into cheap stocks. The divergence of cash flows gives investors hope that specific opportunities still exist, rather than all stocks having a pessimistic outlook according to the overall index.

Ha Anh/Market life