Widespread investor fear that banking crisis will damage economy

Investment platform Shojin, reveals how recent banking failures at SVB and Credit Suisse have impacted investor confidence. 

A survey of over 900 retail investors in the UK has revealed:

  • 49% have less confidence in the banking sector in the wake of SVB and Credit Suisse collapses
  • 32% saw their investments negatively impacted by the banking turmoil
  • 55% are concerned the sector’s weakness could spread to the economy

The majority of retail investors in the UK are concerned that the banking sector’s recent collapses will damage the wider economy, new research from Shojin has revealed.

The FCA-regulated investment platform commissioned an independent survey among 914 UK adults, all of whom have investment portfolios worth in excess of £10,000 – this includes all forms of investments but discounts their savings, pensions and property used as a primary residency.

Half (49%) of investors said they have less confidence in the banking sector following the high-profile collapses of Silicon Valley Bank and Credit Suisse earlier this year. Even more (55%) are worried that these events will further harm the UK’s faltering economy. 

Shojin’s study also showed that 32% of retail investors saw their investments negatively impacted by the banking collapses.

Elsewhere, the research revealed that 44% of investors are less confident in traditional investment classes than they were a year ago, while 36% say alternative asset classes are likely to play a bigger role in their investment strategies. This is particularly true for younger investors, with the figure rising to 55% amongst those aged 18-34.

According to 37% of investors, diversification is going to play a bigger role in their investment strategies over the coming year.

Jatin Ondhia, CEO of Shojin, said: “The banking collapses of recent months have added doubt and uncertainty to an already testing economic climate, with runaway inflation and rising interest rates posing questions for investors and their portfolios. Our research shows that UK retail investors are wary of how the shockwaves from a banking crisis could impact both their investments and the wider economy.

“Crucially, Shojin’s study highlights some of the actions that retail investors are taking amidst this turbulence in the banking sector. For one, diversification is clearly going to be a key trend – investors are likely to rebalance their portfolios in the coming year. What’s more, the research suggests many will look towards alternative asset classes rather than traditional ones in a bid to diversify their investments.”