Aurelia Butler

LONDON (Reuters) – Investors snapped up cash at the highest weekly rate since April 2020 in the week to March 15, according to BofA Global Research on Friday, against a tumultuous backdrop of the failure of several U.S. banks and a rout in global banking shares. Cash funds saw a “huge” inflow of $112.7 billion in the latest week, BofA said, citing EPFR data. The data includes flows in the days after the collapse of Silicon Valley Bank last Friday. Since then, markets have been roiled, but fears have somewhat receded after a series of lifelines for struggling banks helped restore some investor confidence.Inflows into cash for the first quarter of 2023 are on course to be the highest since the second quarter of 2020, BofA said.Meanwhile, equity funds saw a “tiny” weekly outflow of $26 million, and investors pulled $2.3 billion from bonds and put $600 million into gold.Since the flow data’s cut-off on Wednesday, the Swiss National Bank has stepped in to offer Credit Suisse a $54-billion loan to shore up liquidity and restore investor confidence while the U.S.’s First Republic Bank (NYSE:FRC) received a $30 billion lifeline from a cohort of large U.S. banks. The turmoil in markets has spooked investors, but BofA said equity flows had been unchanged week-on-week and there was “no equity capitulation”. Even so, in Friday’s report, BofA highlighted that emergency borrowing by banks could lead to tighter lending standards, a small business credit crunch and higher unemployment. There was a “flight to quality” in fixed income according to BofA, with $9.8 billion poured into Treasuries – the largest weekly inflow since May 2022. Emerging market debt recorded its biggest outflow since November, of $3.1 billion.BofA’s bull and bear indicator – a measure of market sentiment – dropped sharply to 3.5 from 4.2 the previous week, its lowest since January, with BofA citing “weaker credit flows and worsening breadth in stocks”. More

HANOI (Reuters) – Vietnamese electric-vehicle (EV) start-up VinFast said on Friday three senior sales and customer-service have left the company this week.The departures are the latest in a string of executive changes for the ambitious Vietnamese automaker. They also come after a delayed and costly rollout of VinFast’s first EVs in California, its debut overseas market. In a statement to Reuters, VinFast said Gareth Dunsmore, deputy chief executive for global sales and marketing, had left “due to personal reasons and we respect his decision”.VinFast said two other U.S.-based executives had left because of “changes in the management model and specific business requirements”: Greg Tebbutt, who had been chief marketing officer, and Craig Westbrook, former chief service officer.Dunsmore, Tebbutt and Westbrook could not be immediately reached for comment.The company, a subsidiary of conglomerate Vingroup JSC, dispatched a shipment of 999 of its VF8 SUVs to California from Vietnam in November, but needed until earlier this month to prepare them for delivery to customers after disclosing the car would have lower battery range than it had flagged to buyers.VinFast has been selling the first batch of VF8s, rebranded as the City Edition to account for the lower range, on lease in California. It expects to ship a longer-range version of the VF8 later this year.The company is looking to break into the U.S. EV market at a time when established competitors, led by Tesla (NASDAQ:TSLA), are driving down prices and preparing to roll out a range of new models.Rival EV startups, including Lucid, Rivian and electric truck maker Nikola, have faced pressure from lower orders, higher interest rates and increased competition.In February, VinFast consolidated operations in the U.S. and Canada, cutting some 80 jobs, including former U.S. Chief Financial Officer Rodney Haynes.In June, VinFast said it had ended its contract with Emmanuel Bret, the predecessor as deputy CEO for global sales to just-departed Dunsmore. Three other senior executives also left at that time. Huy Chieu, a former General Motors (NYSE:GM) engineer who was promoted in June to lead EV product development, resigned in December before the company’s first cars were delivered to U.S. customers.VinFast has also had three CEOs since its founding in 2017.The company, which began production in 2019, is planning to build a factory in North Carolina and has filed to list its shares through an initial public offering (IPO) in the United States.VinFast lost $2.1 billion in 2022 on revenue of $634 million, it said in a registration statement for an IPO.(This story has been corrected to fix Emmanuel Bret’s last name in paragraph 11) More

LONDON (Reuters) -European stock indexes edged lower on Friday after an early recovery ran out of steam, while Wall Street futures were mixed as investor sentiment remained fragile after a week of turbulence.In a crisis that began with the collapse of U.S.-based Silicon Valley Bank last Friday, risk appetite plunged earlier in the week as investors lost confidence in regional banks in the United States and Credit Suisse in Europe. The tumultuous week saw bond yields drop as investors lowered their expectations for future rate rises.Risk appetite showed signs of recovery on Thursday, helped by Credit Suisse saying it would borrow up to 50 billion Swiss francs ($54 billion) from the Swiss National Bank and, later in the day, a group of major banks injecting $30 billion in deposits into First Republic Bank (NYSE:FRC), a mid-sized U.S. lender.Still, analysts say the worry about a possible banking crisis is far from over.Credit Suisse’s chief executive said on Friday the bank was working hard to stem customers outflows, although this could take time. Credit Suisse shares resumed their decline.European Central Bank supervisors do not see contagion for euro zone banks from the market turmoil, a source familiar with the content of an ad hoc supervisory board meeting earlier this week told Reuters.At 1207 GMT, the MSCI world equity index, which tracks shares in 47 countries, was up 0.3% on the day.Europe’s STOXX 600 was down 0.1% and set to lose 1.9% on the week overall.London’s FTSE 100 was little changed. Wall Street futures were mixed.The U.S. 2-year Treasury yield, which is the most sensitive to shifts in interest rate expectations, was up 1 basis point on the day at 4.1426% – still closer to Wednesday’s six-month low of 3.72% than the peak of 5.084% it hit the previous week, which had been its highest since 2007.The European Central Bank raised rates by 50 bps on Thursday, sticking to its pledge to fight inflation even as some investors called for a pause in the rate-hiking cycle until the banking turmoil eases.The benchmark German 10-year yield was down 5 bps at 2.193% (DE10YT=RR).Markets are pricing in a 25 bps increase by the U.S. Federal Reserve when it meets next week, down from previous expectations for a 50 bps increase.Fed data on Thursday showed that banks sought record amounts of emergency liquidity in recent days, which in turn helped undo months of central bank effort to shrink the size of its balance sheet.”The fact that the Fed has been very proactive in terms of opening the liquidity tap is potentially useful and that’s stabilised things in the short term at least,” said Guillaume Paillat, multi-asset portfolio manager at Aviva (LON:AV) Investors.”It’s potentially a more stable environment, because it feels like we’ve passed the crisis point and things should normalise a bit.”Against a basket of currencies, the U.S. dollar was down 0.2% . The Australian dollar, seen as a liquid proxy for risk appetite, was up 0.6% on the day at $0.6695.The British pound and the euro were both up 0.2%.Oil prices benefited from the initial resurgence of risk appetite, before paring gains, with Brent crude futures up 0.4% and U.S. West Texas Intermediate crude up 0.7% after having hit their lowest in more than a year earlier in the week. More

(Reuters) – European Central Bank supervisors see no contagion for euro zone banks from recent sector turmoil, a source said on Friday, after U.S. lenders threw First Republic Bank (NYSE:FRC) a $30 billion lifeline and tapped record amounts from the Federal Reserve. Large U.S. banks on Thursday swooped in to rescue the San Francisco-based lender, which was caught up in market volatility triggered by the collapse of two other mid-size U.S. banks.The rescue package came shortly after embattled Credit Suisse tapped an emergency central bank loan of up to $54 billion to shore up its liquidity. Shares in Switzerland’s second-largest bank fell again on Friday despite the move, with First Republic’s shares indicated 12% lower in U.S. pre-market trading. The ECB held an ad hoc supervisory board meeting, its second this week, to discuss the stresses and volatility in the banking sector in an unusual move ahead of a scheduled one next week.But the supervisors saw no contagion to euro zone banks from the market turmoil, a source familiar with the meeting’s content told Reuters, adding they were told deposits were stable across the sector and Credit Suisse exposure was immaterial.An ECB spokesperson declined to comment.Euro zone banks are still sitting on some 4 trillion euros ($4.25 trillion) worth of excess liquidity, which they are even keen to hand back to the ECB now that borrowing from it has become more expensive, as central bank data showed on Friday.A German government spokesperson said the current situation with European banks is not comparable to the 2008 financial crisis, adding during a regular news briefing that there is no cause for concern about the country’s banking sector.Banking stocks globally have been battered since Silicon Valley Bank collapsed last week due to bond-related losses that piled up when interest rates surged last year, raising questions about what else might be lurking in the wider financial system.While the two deals and action by policymakers have helped restore some calm, analysts and investors are still concerned about the potential for a full-blown banking crisis.The scale of stress was underscored by data on Thursday showing banks in the U.S. sought record amounts of emergency liquidity from the Fed in recent days, driving up the size of the central bank’s balance sheet after months of contraction.The First Republic deal was put together by power brokers including U.S. Treasury Secretary Janet Yellen, Fed Chairman Jerome Powell and JP Morgan CEO Jamie Dimon, a source familiar with the situation said.”They will keep the money in First Republic to keep it alive for self interest … to stop the run on banks. Then they will take it away gradually and the bank will play out a slow death,” Mathan Somasundaram, founder at research firm Deep Data Analytics in Sydney, said on Friday. (Graphic: First Republic Bank’s stock market collapse – https://fingfx.thomsonreuters.com/gfx/mkt/lgpdkjkggvo/Pasted%20image%201678991547543.png) Some of the biggest U.S. banking names including JP Morgan Chase (NYSE:JPM) & Co, Citigroup Inc (NYSE:C), Bank of America Corp (NYSE:BAC), Wells Fargo (NYSE:WFC) & Co, Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) were involved in the rescue, according to a statement from the banks.While the support has prevented an imminent collapse, investors were startled by First Republic’s late disclosures on its cash position and just how much emergency liquidity it needed. “People are concerned that the contagion risk is real, and that rattles confidence,” said Karen Jorritsma, head of Australian equities, RBC Capital Markets. “I don’t think we are in the crux of a global financial crisis. Balance sheets are much better than they were in 2008, banks are better regulated,” she added.Credit Suisse became the first major global bank to take up an emergency lifeline since the 2008 financial crisis amid doubts over whether central banks will be able to sustain aggressive rate hikes to rein in inflation. (Graphic: Credit Suisse goes off piste – https://www.reuters.com/graphics/CREDITSUISSEGP-STOCKS/akveqegdgvr/chart.png) LESSONS FROM 2008For now, authorities are confident the banking system is resilient and have tried to emphasise that the current turmoil is different to the global financial crisis 15 years ago as banks are better capitalised and funds more easily available.The ECB pressed forward with its 50 basis point rate hike, arguing that euro zone banks were in good shape and that if anything, higher rates should bolster their margins.Focus now swings to the Fed’s policy decision next week and whether it will stick with its aggressive interest rate hikes as it seeks to get inflation under control.Japan’s Prime Minister Fumio Kishida said after a three-way meeting between the country’s government, banking regulator and central bank that the talks were held as part of efforts to closely watch any impact on financial system stability.”Japan’s financial system remains stable as a whole,” Kishida told a news briefing.Singapore, Australia and New Zealand also said they were monitoring financial markets but were confident their local banks were well capitalised and able to withstand major shocks.While capital remains adequate, analysts say a A$300 billion ($201 billion) refinancing task for Australia’s biggest banks is about to get harder, as appetite for new debt shrinks. 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(Reuters) – Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS) and at least two other banks expect the European Central Bank to deliver a smaller quarter-point hike in May, as it grapples with stress in the banking sector and high core inflation. Goldman’s terminal rate forecast for the ECB now stands at 3.5%, down from 3.75% expected previously when it forecasted a 50-bps raise in May. For Morgan Stanley, a smaller May hike expectation leaves the peak rate forecast at 3.75% by July, down from 4% expected earlier. The changes in forecast follow the ECB’s decision on Thursday to press ahead with a 50-bps hike in its deposit facility rate, taking it to 3%. Some rate-setters had called for a smaller raise amid uncertainty in the banking sector. The collapse of U.S. mid-size banks Silicon Valley Bank and Signature Bank (NASDAQ:SBNY), and worries about the future of First Republic Bank (NYSE:FRC) and larger Swiss lender Credit Suisse, have prompted bets that central banks could temper or even pause interest rate hikes as they scramble to contain the contagion. “We believe that further rate hikes (by the ECB) are likely despite the financial market volatility because the risk of severe banking sector contagion still looks limited and core inflation is likely to remain strong in coming months,” Goldman Sachs economists, led by Sven Jari Stehn, said in a note dated March 16.HSBC says it has retained its ECB terminal rate forecast at 3.5%, but now expects the central bank to deliver two smaller 25-bps hikes in May and June, as opposed to a 50-bps hike in May it expected earlier. Barclays (LON:BARC) holds the same view. Traders see the ECB rate peaking at around 3.23% by September or October.Meanwhile, J.P.Morgan, Deutsche Bank (ETR:DBKGn) and Swedish Bank SEB expect the ECB to deliver a 50-bps hike in May, but warned of downside risks to their forecasts given current market volatility and inflation remaining well above the central bank’s target.The ECB cut its inflation projections on Thursday to 5.3% for 2023, still well-above above its 2% target. More