SHARE PRICES AND MARKET ANALYSIS

A snapshot of bike and ATV industry share performance across key manufacturers and major global markets at the trading week closure on Friday 17 March 2023. BDN financial editor Roger Willis reports.

USA — FINANCIAL CRISIS V2.0

The collapse of tech-oriented funding specialist Silicon Valley Bank (SVB) in the second week of March initiated a domino contagion effect. SVB’s UK subsidiary was bought out by HSBC for the princely sum of £1, in a sweet-heart deal negotiated by Downing Street to protect British depositors. Another similarly distressed US West Coast lender Signature Bank joined SVB in oblivion, although unrequited depositors in both were promised relief by US Treasury regulators.

Such efforts to stabilise the financial system and head off broader panic were only partially successful. And then First Republic bank, also based in California, teetered on the brink too. An emergency $30bn cash injection from big Wall Street institutions JP Morgan and Goldman Sachs temporarily kept the wolves from First Republic’s doors. But its share price still plunged by more than 30% as the weekend approached and depositors continued to queue, desperate to withdraw their money. Overall, the value of global banking equities sank by $460bn in what was described as a “week of madness”. The US retreat accounted for $268bn of that total.

To some extent, New York market indices concealed the degree of abject panic. The blue-chip S&P 500 actually finished positive by 1.4%, because investors viewed really big-league bank listings residing therein as safe-haven destinations for punters’ wealth. But the Dow Jones Industrial Average closed 0.1% down and S&P’s MidCap 400, packed with manufacturers facing a potential debt availability famine, fell by 3.2%. Petrolhead powersports producers, led by Harley-Davidson, were among the victims. Harley shares have now lost more than 20% of their value since SVB folded.

Conversely, tech stocks were fairly buoyant and the tech-heavy NASDAQ Composite put on 4.4%. Many of these companies had been quick to move their loot out of afflicted banks, responding much faster than old-school depositors.

EUROPE — RUNNING FOR COVER

The contagious nature of panic-stricken runs on the banking system is without boundaries, and this one crossed the Atlantic rapidly — wiping $163bn off the value of European banks in the past week. Switzerland’s second-largest investment bank, Credit Suisse, was hammered remorselessly and swiftly succumbed. Its inability to cope with the pace of deposit withdrawal, and bond trading at distress levels, left chief executive Ulrich Körner pleading for immediate intervention from central banker Swiss National in Zurich. Credit Suisse promptly received an emergency bail-out worth $54bn. Analysts think it is unlikely to survive the fallout.

The effect on European stock markets beyond the banking sector was self-evident. Confidence ebbed away. Among key indices featuring powered two-wheeler presences, Frankfurt’s Dax Performance and the FTSE MIB in Milan respectively dropped by 4.3% and 6.6%. Austria’s ATX suffered a 9.3% dive. Every biker stock fell. Volkswagen Group, despite issuing a swathe of excellent full-year results including record figures for its Ducati subsidiary, executed a double-digit percentage plunge.

JAPAN — NO ESCAPE IN THE FAR EAST

Japanese equities investors were thrust into disarray by the prospect of a financial crisis repeat appearance as well. Perennially stable indigenous banking stocks saw $29bn slashed off their value over five tumultuous trading sessions.

Tokyo’s Nikkei 225 index booked a 2.9% weekly loss, sentiment sapped out of a broad cross-section of solid manufacturing and exporting companies. All four biker stocks saw their weekly rides ruined by greater degrees.

INDIA — BEGGING FOR MERCY (AND MONEY)

Increasingly dependent on juicy inflows of Western capital investment to fund a hopefully expanding economy in what is now the world’s most populous nation, Indian entrepreneurs perceived burgeoning US and European financial chaos with trepidation.

Already on the back foot after a recent spate of home-grown fiduciary scandals, Mumbai’s BSE Sensex 30 market index closed 2.9% down. And, mindful of the sombre mood, all five major indigenous motorcycle manufacturers declined in value.

CHINA — LAUGHING OR OTHERWISE

Given the increasingly adversarial stance between China and America, the Chinese would no doubt prefer to be laughing behind their hands at an upsurge of financial woes among the US and its allies. Unfortunately, although they don’t like to admit it, funding stability from a reliable US dollar available in copious quantities is vital to restore China’s ailing export markets. So few smiley faces can be seen.

Shanghai’s SSE Composite all-share index just managed to drag itself back into 0.6% positivity. But the blue-chip CSI 300 covering big cheeses on the Shanghai and Shenzhen exchanges stayed 0.2% in arrears. For a second consecutive week, the vast majority pf biker stocks were losers. But once again, the Communist-controlled Jialing parental conglomerate CETC spectacularly bucked market trends — by fair means or foul. Probably the latter.