The coronavirus outbreak has caused significant instability and high volatility in global capital markets. The financial sector has been one of the most affected. Banking stocks’ performance has been strongly impacted during the Covid-19 crisis. This has caused bank valuations to plunge in countries across the globe in the second quarter of 2020.
According to data presented by ForexSchoolOnline.com, the market capitalization of the global banking market amounted to €5.3trn in the said quarter; a 28% fall year-on-year. In the first half of 2016, the global stock markets were on their shakiest footing in years driven by concerns about economic growth and the effectiveness of central banks’ policies. At that time, the market capitalization of the global banking sector stood at €5.5trn, revealed the BankingHub and Statista data.
By the end of the year, this figure rose to €6.8trn. In the next twelve months, the global banking sector’s market cap continued growing and reached €7.9trn in the fourth quarter of 2017. Statistics show that 2018 ended with a €6.5trn in market capitalization of the global banking sector, an 18% drop year-on-year.
2019 witnessed an increasing trend with all banks’ market capitalization reaching €7.6trn in the fourth quarter of the year, despite the global economic downturn, uncertainty and geopolitical tensions. However, the Covid-19 outbreak changed that, causing the lowest quarterly value since the 2008 financial crisis. Statistics show that in the first quarter of 2020, the global banking market cap slumped to €4.9trn, a 31% decrease year-on-year.
The world`s leading banks each have a market cap up to hundreds of billions of U.S. dollars. However, the Covid-19 crisis triggered a sharp decline in these values, causing substantial losses to the leading financial institutions.
Statistics show that the combined market capitalization of JP Morgan Chase, Bank of America, Industrial and Commercial Bank of China, Wells Fargo, and China Construction Bank, as the largest financial institutions globally, slumped by $465.1bn or almost €390bn amid the coronavirus outbreak, falling from $1.46trn in December 2019 to $999.8bn in July.
As the leading bank in the world, JP Morgan Chase has witnessed the most significant decrease in the market capitalization since the beginning of the year, with the value plunging by $142.6bn between December and July. The market cap of Bank of America, the second-largest financial institution in the world, stood at $215.5bn last month, a $101.2 drop since the beginning of the year.
The combined market capitalization of the two largest Chinese banks, Industrial and Commercial Bank of China and China Construction Bank, plunged by $93.7bn amid the Covid-19 crisis, falling from $483.5bn in December to $389.8bn last month. Statistics indicate Wells Fargo has witnessed the most significant drop in the market cap value, with the figure falling to $99.9bn in July, a 55% fall since the beginning of the year.