Collapse of SVB not expected to have direct or major impact on local bourse, Malaysian companies

KUALA LUMPUR: The collapse of Silicon Valley Bank (SVB) in the United States will not have a direct or major impact on the local bourse or Malaysian companies, said an analyst.

Malacca Securities Sdn Bhd senior analyst Kenneth Leong said there would be marginal or no impact.

"It may trigger some indirect effects as banks (would be more careful) after this issue. Perhaps it may result in the tightening of lending or margin policies regarding crypto markets,” he told Bernama.

Echoing Leong, Rakuten Trade Sdn Bhd vice-president of equity research Thong Pak Leng said the crisis would have little impact on Bursa Malaysia and is not worrying.

"(There may be a) little impact but we don't need to worry because the US banking system is different from ours. We are more strict, hence the risks are lower.

"What happened today was a knee-jerk (reaction), (resulting in some) panic selling ... when people realise later (that there is little impact), they will buy back,” he said.

Thong believes the selldown today was unjustified as the Malaysian banking system is highly regulated where asset quality risks are well contained.

Bursa Malaysia opened broadly lower today as market participants kept a close watch on any potential downside risk to the local financial situation following the collapse of SVB.

It closed easier amid mixed sentiment in regional bourses following a heavy global selldown, which saw the benchmark FBM KLCI falling 11.25 points, or 0.79 per cent, to 1,421.83 from Friday's close of 1,433.08.

US state regulators have also closed New York-based Signature Bank two days after authorities shuttered Silicon Valley Bank, according to media reports.

Meanwhile, Economy Minister Rafizi Ramli, in a Twitter post, said he does not expect any direct impact on Malaysian companies arising from the collapse of SVB as no Malaysian firm has deposited at SVB.

"But if the collapse drags the US banking and the capital markets temporarily, it might (weigh) on us too albeit at a much smaller scale,” he said. - Bernama