Asia Markets, Silicon Valley Bank, Cryptocurrency

The US government’s intervention in the Silicon Valley bank collapse is “not a bailout,” says Bill Ackman, founder and CEO of hedge fund Pershing Square Capital Management.

In a tweet, Ackman explained that in this incident, the shareholders and bondholders of the banks will mainly be affected, and the losses will be absorbed by the FDIC’s insurance fund.

This contrasts with the 2008 financial crisis, in which the US government pumped taxpayer money in the form of preferred stock into banks, and bondholders were protected.

“Many of the people who got it wrong suffered little or no consequences. Those were rescues,” Ackman wrote.

In this case, he added, “the people who screwed up will bear the consequences. Investors who did not adequately supervise their banks will be shut out and bondholders will suffer a similar fate.”

Had regulators not intervened, Ackman was of the opinion that the United States would have seen “a 1930s bank continue to run first thing Monday, causing enormous economic damage and hardship to millions.”

– Lim Hwi Ji

Shares of South Korean entertainment company SM Entertainment fell nearly 20% after rival Hybe announced it would withdraw its takeover bid over the weekend.

in a statement on SundayHybe – the company behind K-pop sensation BTS – said it made the decision “after noticing that the market was showing signs of overheating due to competition with both Kakao and Kakao Entertainment.”

She added, “This acquisition, along with the tender offer, may harm shareholder value and fuel market overheating in decision-making.”

This is the latest move in a very public battle between Kakao and Hybe over SM Entertainment that began in February.

Meanwhile, Hybe shares were up 1.91%, and Kakao shares were up 1.38% Monday morning.

– Lim Hwi Ji

Economist Jan Hatzius said in a note on Sunday that Goldman Sachs no longer sees an argument for the Federal Reserve to raise interest rates at next week’s FOMC meeting.

“In light of the stress in the banking system, we no longer expect the Federal Open Market Committee to raise interest rates at its next meeting on March 22,” Goldman Sachs said in a note.

Hatzios and a team of economists added that they still expect an increase of 25 basis points in May, June and July, reiterating their forecast for the final interest rate of 5.25% to 5.5%.

– Jihe Lee

Asian banks will not be affected by the Silicon Valley bank collapse because most of their deposits are in loans — not in Treasurys, according to Moody’s Investors Service.

“If you look at the typical loan-to-deposit ratio in Asia, it’s about 90%, so most deposits are invested in loans,” Eugene Tarzimanov, vice president of Moody’s, told CNBC’s “Squawkbox Asia.” .

“It is clear that banks invest in government securities – domestic bonds and foreign bonds, but this share is not that important.”

Tarzimanov also noted that Asian banks are resilient because of their “strong capital, quality loan books, and most importantly, good funding and liquidity.”

– Sumathi Bala

The closed Silicon Valley bank’s Chinese joint venture said its operations were “independent and stable” amid the collapse of its US parent company last week.

SPD Silicon Valley Bank is a 50-50 joint venture between Silicon Valley Bank and Shanghai Pudong Development Bank.

The bank said in a statement on its website that it “always operates in a stable manner in accordance with Chinese laws and regulations, with a standardized governance framework and an independent balance sheet.”

“As the first technology bank in China, Silicon Valley SPD is committed to serving Chinese science and technology companies, and always follows Chinese regulations for stable operations,” the bank added.

– Lim Hwi Ji

President Joe Biden tweeted that US regulators had reached a “resolution” regarding issues related to Silicon Valley Bank and Signature Bank.

“The American people and American companies can trust that their bank deposits will be there when they need them,” he said in a Twitter thread.

“I am deeply committed to holding those responsible for this mess accountable and continuing our efforts to strengthen oversight and regulation of Big Banks so we will never be in this situation again,” Biden wrote in a tweet.

– Jihe Lee

Shares of a UK-based technology company that designs custom chips and semiconductors are expected to rise more than 50% in the next 12 months, according to Barclays Equity Research.

The investment bank said the fast-growing data center space will drive sales and profit growth faster than any other company in our coverage.

CNBC Pro subscribers can read more about semiconductor stocks here.

– Ganesh Rao

Citi said the world is going through “rapid and transformative change” when it comes to energy, and called four Buy-rated stocks the “top picks” in the space.

CNBC Pro subscribers can read more here.

– Wizen tan

Andrew Tilton, chief economist for Asia-Pacific at Goldman Sachs, said the economic outlook for the region is unlikely to be affected by the fallout from the collapse of Silicon Valley.

“To the degree that this is addressed relatively quickly by regulators and does not spread to additional entities beyond those observed thus far, it is unlikely that we will see a significant impact on the outlook for growth in Asia,” Tilton told CNBC. “Squawk Box Asia”.

He reiterated the company’s forecast for China’s economy and stressed that it will be mostly driven by reopenings after the zero Covid policy.

“We still expect growth of 5.5% for China this year, mostly driven by reopening and perhaps less sensitive to this particular issue,” Tilton said.

– Jihe Lee

Veteran banking analyst Dick Bove said US banks have lost credibility with ordinary investors because of what he describes as “accounting tricks,” he told CNBC’s “Squawk Box Asia.”

“Bank accounting in the United States is rubbish,” he said. He added that banks use “accounting tricks to avoid referring to real ownership rights in these banks.”

Bove further noted that the problems with the Silicon Valley bank collapse were driven by federal direct loans.

“They have $110 billion in investments in US government-backed securities, Treasurys, and mortgage-backed securities,” he said. “It’s not the loans that caused the problem, it’s the US-backed securities that caused the problem.”

– Jihe Lee

Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell, and Federal Insurance Corporation Chairman Martin J. Gruenberg issued a joint statement Sunday night explaining their reasons for creating a plan to support depositors and protect financial institutions with money in Silicon Valley Bank.

“We are taking decisive action to protect the US economy by strengthening public confidence in our banking system,” the statement said. “This move will ensure that the US banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a way that promotes strong and sustainable economic growth.”

The Silicon Valley bank failed on Friday, marking the bank’s biggest failure since the 2008 financial crisis. That then raised concerns about other banks that could see similar risks.

“The US banking system remains resilient and on a solid footing, due in large part to reforms made after the financial crisis that ensured better safeguards for the banking industry,” the officials said in a statement.

“These reforms, combined with today’s actions, demonstrate our commitment to taking the necessary steps to ensure that depositors’ savings remain safe.” they added.

– Fred Imbert

Cryptocurrencies rallied along with stocks as US regulators unveiled a plan to reassure depositors of Silicon Valley Bank they will get their money back after the bank’s stunning collapse on Friday.

Bitcoin and ether both jumped about 7% after 6:30 PM ET, according to Coin Metrics.

The moves came even as New York’s Signature Bank was closed by the New York State Department of Financial Services on Sunday, according to a joint statement from the Treasury Department, the Federal Reserve and the FDIC.

Signature Bank was another popular crypto-friendly institution and the second largest next to Silvergate, which announced its impending liquidation last week.

Its closure adds to the fears of cryptocurrency investors and entrepreneurs that the industry is being dumped out of the US banking system, leaving it without “ramps” that would allow fiat money to flow into crypto assets. Silvergate and Signature have helped solve this problem by creating easy banking and payment platforms for crypto companies.

Wall Street analysts on Friday maintained Buy ratings on Signature Bank, despite bad news from peers earlier in the week.

– Tanaya McHale

Futures extended gains before 6:30pm ET after US regulators unveiled a plan to stem the damage from the Silicon Valley bank collapse.

Dow futures were last up 297 points, or 0.9%. S&P 500 futures jumped 1.1% and Nasdaq Composite futures advanced 1.2%.

– Tanaya McHale