How the Silicon Valley Bank (SVB) crisis may affect mutual funds, IPOs and other assets – explained

Collapse of the SVB: After the Silicon Valley Bank (SVB) crisis, global stock markets and the US dollar are under stress. In the past two sessions, the US dollar has retreated from three-month highs as the dollar index slipped from around 106 to around 103 levels, while major benchmark indices on Wall Street fell as much as 2 percent in Friday’s session have lost. Gold prices, however, surged to levels of $1,880 an ounce today and are up about $65 an ounce from Thursday’s lows of around $1,815. After failing to stay above the 4% yield, the US bond yield started to rise again.

Collapse of the SVB: After the Silicon Valley Bank (SVB) crisis, global stock markets and the US dollar are under stress. In the past two sessions, the US dollar has retreated from three-month highs as the dollar index slipped from around 106 to around 103 levels, while major benchmark indices on Wall Street fell as much as 2 percent in Friday’s session have lost. Gold prices, however, surged to levels of $1,880 an ounce today and are up about $65 an ounce from Thursday’s lows of around $1,815. After failing to stay above the 4% yield, the US bond yield started to rise again.

According to investment experts, this collapse of the SVB, followed by the closure of Signature Bank, will severely affect bond yields, especially for government bonds. However, this is only limited to the US bond market, for Indian government bonds, which are regulated by the Reserve Bank of India, this crisis will not have a major impact. For mutual fund investors, Indians investing in international and international hybrid funds will be affected by the recent collapse of SVB and Signature Bank.

According to investment experts, this collapse of the SVB, followed by the closure of Signature Bank, will severely affect bond yields, especially for government bonds. However, this is only limited to the US bond market, for Indian government bonds, which are regulated by the Reserve Bank of India, this crisis will not have a major impact. For mutual fund investors, Indians investing in international and international hybrid funds will be affected by the recent collapse of SVB and Signature Bank.

In the forex market, those with a position in the dollar must also face the hitting as the US dollar has retreated from 3-month highs on a major scale over the past three days. The Dollar Index is currently trading at 103.523, which was trading close to 106 on Thursday. However, the biggest hit of this US banking crisis would be the IPO and the US stock market. They said banks that reported collapsing in the past three days were key lenders to the US-based startups. So after these banks fail, the IPO market will collapse in the short term while the US stock market would be under tremendous pressure.

In the forex market, those with a position in the dollar must also face the hitting as the US dollar has retreated from 3-month highs on a major scale over the past three days. The Dollar Index is currently trading at 103.523, which was trading close to 106 on Thursday. However, the biggest hit of this US banking crisis would be the IPO and the US stock market. They said banks that reported collapsing in the past three days were key lenders to the US-based startups. So after these banks fail, the IPO market will collapse in the short term while the US stock market would be under tremendous pressure.

Hit the US IPO market

Discussing the impact of this SVB crisis on the global stock market, Kartik Jhaveri, Director – Wealth at Transcend Consultants said: “SVB and Signature Bank used to run startups and following the collapse of SVB and Signature Bank, cash flow for startups continues to be challenged the USA remain in the short term. This will have a negative impact on the US IPO market as startups planning a listing could delay their public offering until the actual picture is in.

Hit the US IPO market

Discussing the impact of this SVB crisis on the global stock market, Kartik Jhaveri, Director – Wealth at Transcend Consultants said: “SVB and Signature Bank used to run startups and following the collapse of SVB and Signature Bank, cash flow for startups continues to be challenged the USA remain in the short term. This will have a negative impact on the US IPO market as startups planning a listing could delay their public offering until the actual picture is in.

Effects of the SVB crisis on mutual funds

When asked about the impact of the SVB crisis on the mutual fund market, Kartik Jhaveri said: “Debt funds will not have a big impact in either the US or India. However, for Indian mutual fund investors involved in international mutual funds and international hybrid mutual funds, this news is not good news. For mutual fund investors in the US, short-term returns from their equity funds would be hurt, but for medium- to long-term investors, wait and see.”

Effects of the SVB crisis on mutual funds

When asked about the impact of the SVB crisis on the mutual fund market, Kartik Jhaveri said: “Debt funds will not have a big impact in either the US or India. However, for Indian mutual fund investors involved in international mutual funds and international hybrid mutual funds, this news is not good news. For mutual fund investors in the US, short-term returns from their equity funds would be hurt, but for medium- to long-term investors, wait and see.”

Impact on US dollar rates

“The collapse of the SVB removed uncertainty about the US banking system. Therefore, both the US economy and the US currency are expected to face investor wrath in the near future. As such, US dollar rates are expected to remain under pressure until a specific path map is announced by the US government,” said Anuj Gupta, Vice President – Research at IIFL Securities.

Impact on US dollar rates

“The collapse of the SVB removed uncertainty about the US banking system. Therefore, both the US economy and the US currency are expected to face investor wrath in the near future. As such, US dollar rates are expected to remain under pressure until a specific path map is announced by the US government,” said Anuj Gupta, Vice President – Research at IIFL Securities.

Impact on the bond market

Commenting on how bond market investors would be affected by this banking crisis, Manikaran Singhal, founder of goodmoneying.com said: “Indian bond investors need not worry about this banking crisis in the US. But for US bond investors, those who trade Treasuries will be adversely affected by this crisis. Therefore, those trading US Treasuries are advised to take a break for almost a week and assess the US bond market how this banking crisis will play out over the next week.”

Impact on the bond market

Commenting on how bond market investors would be affected by this banking crisis, Manikaran Singhal, founder of goodmoneying.com said: “Indian bond investors need not worry about this banking crisis in the US. But for US bond investors, those who trade Treasuries will be adversely affected by this crisis. Therefore, those trading US Treasuries are advised to take a break for almost a week and assess the US bond market how this banking crisis will play out over the next week.”

Disclaimer: The views and recommendations made above are those of individual analysts or brokerage firms and not Mint. We advise investors to consult certified professionals before making any investment decisions.

Disclaimer: The views and recommendations made above are those of individual analysts or brokerage firms and not Mint. We advise investors to consult certified professionals before making any investment decisions.

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