The threat of a credit crisis that creates damaging shockwaves across the global financial system has overtaken inflation as investors’ biggest worry in the wake of a spate of US bank collapses.
Almost a third of fund managers highlighted a “systemic credit event” as the biggest risk to markets, according to Bank of America’s closely watched monthly survey, which canvassed the views of investors overseeing a combined $621bn of assets. The survey was carried out in the wake of the failures of Silicon Valley Bank and Signature Bank, but before the Swiss government forced through a takeover by UBS to rescue ailing lender Credit Suisse.
The troubles in the US banking system sparked an investor stampede out of the sector, which until February had been among the most favoured by global asset managers. Fund managers moved to a net 3 per cent underweight in the US bank sector, a drop of 22 percentage points since last month.