Research

IHSG: Implications From SVB Crisis

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Algo Research Team

Market | Mar 14, 2023 | Views: 57

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Key Summary:

  • Risks are more skewed to the downside, rising volatility
  • Will the Fed pause? Historically not a good sign
  • What now for IHSG?

Early last week we wrote "IHSG: It Is Time To Sell" (read here), saying that "we prefer to believe that when the Fed increases interest rate, history shows that they will always inevitably "break" something in the market typically in the form of a credit event".


Few days later, we got that credit event in the US banking system where SVB (USD209bn in asset) and Signature Bank (USD110bn) went to bust (Since 2000, these were the 2nd and 3rd largest US bank collapse after Washington Mutual). Of course, this is sheer luck on the timing but we have always believed that sooner or later some form of a credit event will happen, which will accelerate economic slowdown and enter a recessionary period.

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