What does the recent banking sector turmoil mean for investors?

Key take-aways

• The failure of SVB and takeover of Credit Suisse appear to be individual cases, and not indicative of systemic banking risk, but investors have been unsure – it’s an issue of confidence.
• The vast majority of European, US and emerging market banks are the strongest they have ever been and central banks and regulators have been swift to provide funding and shore up confidence.
• Financial stocks have lost ground on this uncertainty, but other sectors have not been badly impacted; in fact, with smaller interest rate hikes now expected, growth prospects have improved.
• In the uncertain environment of possible recessions on the horizon in many countries, M&G Investments is taking a cautious approach, waiting to see any further market reaction and has not adjusted their portfolios as a result of the banking turmoil. They are being very selective in their stock-picking, investing according to valuations and the long-term equity themes of technological innovation, infrastructure and sustainability, and have higher cash holdings to take advantage of opportunities as they arise. European and US government bonds are attractive and safe bets.

What’s the impact of the recent global banking sector turmoil on M&G Investments’ outlook for global equities and bonds, bank credit, and portfolio positioning? Hear directly from Jim Leaviss, CIO of Public Fixed Income and Fabiana Fedeli, CIO of Equity, Multi-Asset and Sustainability, at M&G Investments (UK), in this very informative webcast.