ETFs in Focus on Fears of Another Global Financial Crisis

Zacks2023-03-22

The sudden seizure of the Silicon Valley Bank on March 8, made it the biggest banking failure in the United States since the financial collapse of 2008. Silicon Valley Bank, or SVB, had business with ...

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Silicon Valley Bank, or SVB, had business with ...</p>\n\n<a href=\"https://finance.yahoo.com/news/etfs-focus-fears-another-global-212909922.html\">Source Link</a>\n\n</div>\n","source":"yahoofinance","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>ETFs in Focus on Fears of Another Global Financial Crisis</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nETFs in Focus on Fears of Another Global Financial Crisis\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-03-22 05:29 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/etfs-focus-fears-another-global-212909922.html><strong>Zacks</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>The sudden seizure of the Silicon Valley Bank on March 8, made it the biggest banking failure in the United States since the financial collapse of 2008. Silicon Valley Bank, or SVB, had business with ...</p>\n\n<a href=\"https://finance.yahoo.com/news/etfs-focus-fears-another-global-212909922.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU1201861249.SGD","symbol_name":"Natixis Harris Associates US Equity PA SGD-H","start_time":0,"source_url":"https://finance.yahoo.com/news/etfs-focus-fears-another-global-212909922.html","article_id":"2321609969","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/pHtRZocdOyvHlqeLf994Lw--~B/aD00MDA7dz02MzU7YXBwaWQ9eXRhY2h5b24-/https://media.zenfs.com/en/zacks.com/ee9913b9e45a94a46aff009bae7e1c6a"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2321609969","pubTimestamp":1679434149,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"The sudden seizure of the Silicon Valley Bank on March 8, made it the biggest banking failure in the","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU1201861249.SGD":"Natixis Harris Associates US Equity PA SGD-H","BK4118":"综合性资本市场","BK4207":"综合性银行","BK4589":"SVB概念","BK4551":"寇图资本持仓","LU0980610538.SGD":"Natixis Harris Associates US Equity RA SGD-H","LU0348723411.USD":"ALLIANZ GLOBAL HI-TECH GROWTH \"A\" (USD) INC","BK4547":"WSB热门概念","BK4581":"高盛持仓","BK4085":"互动家庭娱乐","BK4504":"桥水持仓","UBS":"瑞银","BK4135":"资产管理与托管银行","XLF":"金融ETF","BK4548":"巴美列捷福持仓","BK4565":"NFT概念","LU0266013472.USD":"AXA WF - Framlington Longevity Economy A Cap USD","IAT":"安硕美国地区银行ETF","USB":"美国合众银行","RBLX":"Roblox Corporation","BK4106":"数据处理与外包服务","BK4554":"元宇宙及AR概念","BPAY":"BLACKROCK FUTURE FINANCIAL AND TECHNOLOGY ETF","BK4567":"ESG概念","BK4585":"ETF&股票定投概念","BK4534":"瑞士信贷持仓","SIVBQ":"硅谷银行","BK4533":"AQR资本管理(全球第二大对冲基金)","LU0130102774.USD":"Natixis Harris Associates US Equity RA USD","BK4211":"区域性银行","LU0648001328.SGD":"Natixis Harris Associates US Equity RA SGD","SIVPQ":"SVB Financial Group","BK4535":"淡马锡持仓","PAYO":"Payoneer Global Inc.","BK4559":"巴菲特持仓","BLK":"贝莱德","BK4588":"碎股","LU1074936037.SGD":"JPMorgan Funds - US Value A (acc) SGD","VFH":"Vanguard Financials ETF"},"translate_title":"ETF关注对另一场全球金融危机的担忧","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"XLF":1,"VFH":1,"UBS":1,"RBLX":1,"PAYO":1,"IMI":1,"IAT":1,"BPAY":1,"SIVPQ":0.9,"SIVBQ":0.9,"SIVBP":0.9,"SIVB":0.9,"FRC":0.9,"BLK":0.72,"USB":0.72},"content_text":"The sudden seizure of the Silicon Valley Bank on March 8, made it the biggest banking failure in the United States since the financial collapse of 2008. Silicon Valley Bank, or SVB, had business with nearly half of the venture backed start-ups in the United States, being majorly involved with the country’s venture-backed tech companies. SVB had around $212 billion in assets in December 2022.\nThe problems for the bank started when the Fed started hiking interest rates continuously last year. In 2021, SVB had invested large deposits of around $190 billion in U.S. government backed bonds and mortgage-backed securities, which then seemed to favor the bank due to being issued in a low interest rate scenario. However, the value of the low interest rate bonds took a tumble because of the rate hikes.\nThe customers of SVB also reduced their deposits in the bank after the venture capital funds cut their funding as interest rates rose. This led to the bank selling assets worth $21 billion in the early weeks of March for a loss of $1.8 billion. Much to the surprise of investors, the bank announced last week that it was planning to raise capital amounting to $2.25 billion via share sale. This sparked panic among its customers, who withdrew $41 billion by the end of March 7. The different venture capital firms also advised their clients to pull out their money from the bank, which ultimately led to the authorities closing the doors on SVB.\nThe Aftermath\nThe sudden collapse of the bank saw $100 billion being wiped out from the market value of U.S. bank stocks just within two days of the event. The seizure of SVB caused a ripple effect on the digital asset industry, with the crypto market witnessing increased volatility. The collapse caused volatility in the global markets as investors feared another global crisis. The Volatility Index neared its six-month high, with rating agencies like Moody’s cutting its outlook on the banking sector to negative from stable.\nHowever, the Fed was fast to intervene and announced that customers of the fallen bank would have access to their funds, as 89% of around $200 billion in deposits was uninsured. The announcement was an attempt to shore up the confidence in the banking sector of the country. Shareholders and unsecured debtors would be covered under the announcement of the Fed.\nThe collapse of SVB saw the greenback weaken which caused many economists and analysts to believe that the Fed may not increase the interest rates with such aggression. Currencies such as the Japanese yen and Swiss franc benefited from the fall of the bank. The Silicon Valley Bank UK was bought by HSBC for 1 pound.\nWhat Does it Mean for Rate Hikes?\nThe percentage of economists who believe that the Fed will hike the interest rates aggressively at 50 bps has gone significantly down. Due to the global ramifications of the collapse, many economists forecast that Australia’s central bank will pause rate hike, while the Bank of England will most likely increase the interest rates less aggressively.\nThe SVB collapse was followed by the collapse of Signature Bank, in what was the third largest financial failure in the history of the U.S. banking system. As of last year, Signature Bank had assets worth $110.36 billion and around $89 billion in deposits.\nCompanies like Roblox RBLX and Payoneer Global PAYO stated that they had around $3 billion and $6.4 billion in cash and security balances, respectively in SVB. U.S. cryptocurrency firm Circle said that $3.3 billion of its coin reserves were in SVB.\nWith the customers already skeptical and regulators on their toes, Swiss authorities wasted no time in facilitating UBS’s UBS takeover of Credit Suisse in an attempt to avoid further panic.\nThe collapse of the regional banks also saw large U.S. banks depositing around $30 billion in $First Republic Bank(FRC-N)$ FRC last week in a bid to rescue the latter from a widening credit crisis. However, the liquidity injection failed to shore up investors’ confidence in First Republic Bank.\nETFs in Focus\nWith the collapse having global ramifications, let’s take a look into some ETFs that were affected by the sudden seizure of U.S. regional banks at the peak of the crisis. The fall in the returns of the following funds was significant due to their exposure to the banking sector.\nFinancial Select Sector SPDR ETF (XLF)\nThe Financial Select Sector SPDR ETF seeks to provide investment results that, before expenses, generally correspond to the price and yield performance of the Financial Select Sector Index. After the collapse, the fund fell around 12.35% in one week. The fund has declined 13.93% in the past month. With 67 securities in its asset basket, the fund invests mostly in banks and capital markets with 31.2% and 27.46%, respectively.\nThe fund has gathered $28.8 billion in its asset base and has a dividend yield of 2.25%. Financial Select Sector SPDR ETF charges 10 bps as annual fees and has a daily average traded volume of around 49 million shares.\nVanguard Financials ETF (VFH)\nThe Vanguard Financials ETF seeks to track the performance of the MSCI US Investable Market Index (IMI)/Financials 25/50. It is a passively managed fund and has 376 securities in its asset basket. With 13.9% of the assets invested in regional banks, the financial crisis saw the fund fall around 12% within a week. The fund has given negative returns of 14.78% in the past month.\nThe fund has amassed $ 7.6 billion in its asset base and charges an annual fee of 10 bps. It has a daily average traded volume of about 483,000 shares.\nBlackRock Future Financial And Technology ETF: (BPAY)\nThe BlackRock Future Financial and Technology ETF seeks to maximize total return by investing in companies delivering innovative and emerging technologies used in the financial services industry. It is an actively managed fund and has 37 securities in its asset basket. Information Technology and Financials, with 59.6% and 38.4%, respectively, are the top two holdings of the fund.\nThe fund reported that its total exposure in SVB and Signature banks as a percentage of its asset base was 5.02%. The collapse of the bank saw the fund fall around 16.6% in a week.  BlackRock Future Financial And Technology ETF has gathered $3.63 million in its asset base.\n IShares U.S. Regional Banks ETF (IAT)\nThe iShares U.S. Regional Banks ETF seeks investment results that generally correspond to the price and yield performance of Dow Jones U.S. Select Regional Banks Index. The fund has 37 securities in its asset basket, with 85.1% invested in regional banks in the United States. With 2.63% of its asset base exposed to SVB and Signature Bank, the fund is down around 29% since the collapse. The fund has lost 35.24% in the past month.\nThe fund has amassed $639 million in its asset base and charges an annual fee of 39 bps. IAT has a dividend yield of 4.41%\nBottom Line\nThe failure of the Silicon Valley Bank and other regional banks has made public more skeptical about the banking sector and the prevalent rules and regulations, with many questioning why the regulators missed the red flags. Many economists believe that this might be a one-off affair. However, the effects of the collapse on the policies and estimates may be drastic.\nWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report\nUBS Group AG (UBS) : Free Stock Analysis Report\nFirst Republic Bank (FRC) : Free Stock Analysis Report\nFinancial Select Sector SPDR ETF (XLF): ETF Research Reports\nVanguard Financials ETF (VFH): ETF Research Reports\niShares U.S. Regional Banks ETF (IAT): ETF Research Reports\nRoblox Corporation (RBLX) : Free Stock Analysis Report\nPayoneer Global Inc. (PAYO) : Free Stock Analysis Report\nBlackRock Future Financial and Technology ETF (BPAY): ETF Research Reports\nTo read this article on Zacks.com click here.\nZacks Investment Research","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2321609969"}