Barclays: Banking fears triggered $1.5 trillion stock market crash
Barclays analysts said $1.5 trillion will be taken off the stock market in the banking crisis and invested in lower-risk money market funds.
While the move could limit losses for investors, it could hamper growth by making it harder for companies to raise money.
The amount of money parked in all so-called money market funds climbed to a new record last month.
Cash piles increased by roughly $304 billion in three weeks, bringing their total assets to $5.2 trillion as of March 29, according to data from the Investment Company Institute.
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Barclays said the continued exit from banks and so-called primary funds investing in riskier debt will only increase the trend for greater security.
Barclays money market strategist Joseph Abate said: „We expect money fund balances to rise sharply over the next year. While concerns about broader bank solvency appear to be waning, this deposit base seems to have caught attention. Institutional investors tend to keep bank deposits above the $250,000 insurance limit. They realized that they did not get much compensation because they took the risk of the unsecured bank by holding on. said.
In addition to exiting the banks for fear of further flight following the collapse of Silicon Valley Bank and two other regional banks
investors withdrew cash from their deposit accounts because increases in these rates followed the returns of money funds.
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Barclays analysts predict that $1.5 trillion will be withdrawn from the stock market during the banking crisis and invested in lower-risk money market funds. While this move could limit losses for investors, it could make it harder for companies to raise money and therefore hinder growth. The amount of money being invested in so-called money market funds reached a new record last month, with cash piles increasing by approximately $304 billion in three weeks, bringing total assets to $5.2 trillion as of March 29th. The continued exit from banks and primary funds investing in riskier debt is expected to increase the trend for greater security. Barclays money market strategist, Joseph Abate, expects money fund balances to rise sharply over the next year.
