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It’s looking gnarly out there for bankers in the United States and investors in their stocks.Here’s what’s on everyone’s mind:
US regulators could be facing a rerun of the winter 2022-2023 regional banking crisis. Prospects of more trouble have captured the imagination of the financial press on both sides of the Atlantic after earnings in the US banking industry fell 45% last year and dismal earnings from New York Community Bancorp sparked a two-day run on regional bank stocks.
THE BACKGROUND- Bank nerds among our readers will remember that three high-profile regional lenders (Silicon Valley Bank, Signature Bank, and First Republic Bank) went bust in a single week, forcing US regulators to step in amid a run on all three. The irony: New York Community scooped up Signature Bank after regulators shut it down.
What’s worrying folks now: Banks in the US hold USD 2.7 tn in commercial real estate loans by most estimates — and pundits think regional lenders account for about 80% of that figure. Tenants are now letting go of leases after nearly four years of low use after covid and the post-covid shift to work from home. That comes as developers are already struggling to make payments amid low occupancy and high interest rates.
Possibly making things worse: Loans to what some in the industry like to call “shadow banks.” US lenders have more than USD 1 tn in exposure to non-bank financial firms including hedge funds, private equity firms, and mortgage lenders, many of whom are now under stress amid high interest rates.
Go deeper: American Enterprise Institute | CNN | Wall Street Journal | Financial Times
MEANWHILE- The S&P 500 closed above the 5,000 mark for the first time on Friday. The milestone can partially be attributed to Nvidia and Meta, which rose over 30% since we rang in 2024. The move was also driven by investor confidence fuelled by promising US inflation data, a strong run of earnings reports, and widespread expectations of monetary easing. (Financial Times | CNN Business)
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TASI |
12,202.78 |
+0.3% (YTD: +2%) |
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MSCI Tadawul 30 |
1,580.96 |
+0.3% (YTD: +2%) |
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USD : SAR (SAMA) |
3.75 Sell |
3.75 Buy |
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Interest rates |
6% repo |
5.5% reverse repo |
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EGX30 |
28,411.41 |
+1.8% (YTD: +14.1%) |
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ADX |
9,344.05 |
-0.2% (YTD: -2.4%) |
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DFM |
4,183.86 |
+0.6% (YTD: +3.1%) |
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S&P 500 |
5,026.61 |
+0.6% (YTD: +5.4%) |
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FTSE 100 |
7,572.58 |
-0.3% (YTD: -2.1%) |
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Euro Stoxx 50 |
4,715.87 |
+0.1% (YTD: +4.3%) |
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Brent crude |
82.19 |
+0.7% |
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Natural gas (Nymex) |
1.85 |
-3.7% |
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Gold |
2,038.70 |
-0.5% |
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BTC |
48,027.19 |
+0.9% (YTD: 122%) |
THE CLOSING BELL-
The TASI rose 0.3% yesterday on turnover of SAR 9.3 bn. The index is up 2% YTD.
In the green: Atheeb Telecom (+9.9%), Savola Group (+6.2%) and NCLE (+5.4%).
In the red: Saudi German Health (-3.5%), 2P (-3.5%) and Sabic Agri-Nutrients (-2.4%).
CORPORATE ACTIONS-
The Capital Market Authority (CMA) has approved a request by Saudi Paper Manufacturing Co. to raise its capital by 10% to SAR 370.7 mn, it said in a statement last week.
