|
By Chris IGGO, Chair of the AXA IM Investment Institute and CIO of AXA IM Core
Markets have taken a hit in the wake of the failure of Silicon Valley Bank (SVB) with some commentators even drawing comparisons to the events of 2008. But we do not believe this is an accurate assessment. Fundamentally, SVB had been struggling with the impact of rising interest rates on its bond portfolio as well as an increasing number of technology firms withdrawing deposits following a drop in venture capital investments.
On 8 March, SVB announced it had been forced to sell a large tranche of the bond portfolio at a significant loss of about $1.8bn and needed to raise $2.25bn in capital through selling shares(i). This triggered a run on the bank and by 10 March...
|