- Man Group Chief Executive Officer Luke Ellis said the stock has yet to hit bottom.
- Ellis said at a Bloomberg Invest conference that he believes a “significant number” of banks will close within the next two years.
- Fearing that local banks won’t be bailed out, depositors may put their money at big financial institutions, he said.
Man Group Chief Executive Officer Luke Ellis said the stock market has taken a further hit as the turmoil in the banking sector continues.
“There’s going to be a big sell somewhere in the near future,” said Ellis, a $143 billion asset manager and head of the world’s largest public hedge fund. Bloomberg Invest Wednesday meeting.
Equities have yet to bottom out in the current market cycle, he said, citing potential credit risk and volatility from corporate earnings.
The collapse of Silicon Valley Bank (SVB), the closure of other specialty firms such as Silvergate and Signature, and financial concerns at Credit Suisse rocked the market. Shares of his SVB peers, including First Republic and PacWest, each fell 90% and his nearly 60% last month on contagion concerns.
After weeks of intense volatility, the market has recovered some losses, but is rocking as investors digest the news and assess the latest policy moves from the Federal Reserve.
Ellis said the bank turmoil could last another two years and that smaller regional banks are at higher risk of closing.
“A significant number of banks will cease to exist 12 [to] 24 months from now,” the hedge fund executive said, adding that some companies could be bought by larger rivals, similar to the UBS deal to buy Credit Suisse.
Customers can also keep their deposits with larger institutions that they deem more stable.
“What that means is that whenever there’s stress, people will try to move their money to one of the banks that the government thinks is lagging behind, and that’s because the deposit base of the smaller banks is precarious. “As we’ve seen, without a stable deposit base, banking wouldn’t work. And, naturally, it’s now precarious.”