Retail Investors Calm after SVB Collapse, Spectrum Markets’ SERIX, Finds

Wednesday, 15/03/2023 | 14:18 GMT by Solomon Oladipupo

The findings are based on sentiment towards NASDAQ 100 and S&P 500.

In the US, bank stock prices tumbled on Monday but rebounded the following day.

On Monday, retail trades in securitized derivatives almost doubled against their daily average despite the uncertainty and concern that trailed financial markets following the collapse of Silicon Valley Bank (SVB). On Friday, when SVB finally collapsed, retail investors “remained calm, not reacting strongly to the news,” Spectrum Markets said.

Spectrum Market in its latest data on the Spectrum European Retail Investor Index (SERIX), which measures retail investor sentiments using the trading venue’s pan-European trading data, noted that retail trade volumes jumped to the highest in the last six months without impacting overall sentiment.

“Last week’s average SERIX sentiment for both the NASDAQ 100 and the S&P 500 increased compared to the previous week, shifting from 100 to 101 and from 97 to 108 respectively, with both indexes crossing the 100 threshold to enter the bullish area,” the securitized derivatives exchange operator explained.

Retail Investors Calm after SVB Collapse, Spectrum Markets’ SERIX, Finds — Source: Spectrum Markets

On Monday, SERIX sentiment maintained its stability as the NASDAQ 100 and S&P 500 indexes declined only slightly to 92 and 98, respectively. “As such, retail investors do not seem to believe that we are on the verge of a new Lehman, trusting the reassurances coming from the US government and the Federal Reserve,” Spectrum Markets explained.

US Bank Share Prices Tumble but Later Rebound

On the contrary, the stock prices of US banks tumbled on Monday, suggesting heavy sell-offs among investors and traders. Regional lender, First Republic Bank saw the highest decline with its share slumping by over 60% to $28 a share during trading hours. Another bank, Western Alliance Bancorp also saw its shares plunge by 64% to $18 a share.

However, things improved the following day as investors began to shake off the fear of contagion from SVB. For instance, First Republic Bank and Western Alliance Bancorp share prices shot up 28% and 14% to $40 and $30 a share, respectively.

Last Friday, SVB burst in what has been described as the largest bank failure in the United States since the 2008 financial crisis. Before that, crypto-friendly Silvergate Bank wound down its operations and voluntarily liquidated its assets. Furthermore, Signature Bank later shut down, becoming the third US bank to fail in the span of four days.