Business

COVID-19 Potential Impact on Global Investment Banking

Post an economically weak 2019 for global investment banks in terms of collection of trading revenues, the forecasts say, it will go weaker in 2020 because of the corona pandemic. Capital markets across the world have been rattled with the adverse effects of the virus outbreak.

The Coronavirus-powered impact can result in curbing the capital market issuances, and could lead to providing acceleration to the already growing economic slowdown, as per the market gurus.

Market cap of largest banks worldwide amid coronavirus outbreak in 2020

Source: Statista

As per Statista, the German market-research firm that specializes in bringing financial market statistics – “In the wake of the COVID pandemic, market cap of the Industrial and Commercial Bank of China (ICBC) fell from $267 billion in December 2019 to $237 billion in April 2020”.

The novel virus was first seen spreading in Wuhan, China in the latter half of December 2019, and since then, it has succeeded to engulf the entire world within its umbrella. The market capitalization of the largest and the most reputed global banks has been severely affected by the virtue of the ever-growing economic impact of the deadly pandemic. However, one bank that has sustained its growth and revenues amid the times of the pandemic is the Japan Post Bank.

On a completely different note, those seeking to start their banking career this year, unfortunately, may not find the opportunities, but can meanwhile, prepare for the future job opportunities by enroling in an online investment banking certification.

Impact of COVID-19 on the Investment Banking Sector in the 1st Quarter

First quarter of this year, despite an impressive start, might not be able to post positive revenue collections, given the acute panic caused by the coronavirus in the months of February and March. Some of the most depressive market selloffs were seen in the first quarter of 2020, which led to commodities and equities prices dropping to record lows.

March 9 officially marked the markets tumbling with rising fears of complete shutdown of economy in the US and Europe when the talks between Saudi Arabia and Russia over global oil supplies went unfruitful. As a result, the Stoxx Europe 600 and S&P500, both reflected a drop by more than 7 per cent.

Institutional Investors in the Times of Skyrocketing Market Volatility

We are going to witness the ongoing volatility in the global financial markets for a considerable period of time from now on, given the unprecedented times the Wuhan virus has brought in. Especially, in the short term, the adversities and miseries are expected to continue, or rise, with stock prices falling uncontrollably at the moment.

Institutional investors would need to adjust their respective portfolios given the rapidly-changing times, or they lose big. More specifically, the strategies concerned with sale of investments like corporate bonds and equities, are needed to be tweaked a little.

Increased market volatility will likely lessen the issuance deeds, which in turn, will significantly hurt the revenue-collection by the globally-trading investment banks in the capital markets.

Investment Strategists Hoping a Comeback in the Latter Half of the Year

Investment strategy planners across the world are hopeful of making a strong comeback in the second half of the year, provided the spread of the virus outbreak comes to a complete halt.

If the containment of the fatal virus is not ensured until the end of 2020, the federal rescue packages will be the only solution to saving the economy for a limited duration. And hence, everything concerned with economic recession eventually boils down to stopping the spread of the virus.

Concluding Thoughts

If the virus-spread lasts till the end of the year, or extends even further, the economic impact will be far-reaching. The pressure of survival on the businesses across the globe will further intensify, leading to a majority of firms giving up on the idea of their existence in the global markets.

Hoping for the containment of virus spread seems to be the only way out to survive through the ongoing testing times.

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button
Close
Close