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Market Commentary | The week that was

Naspers shuts down its fund focused on SA startups: Naspers has closed its R1.4 billion SA-focused technology investment fund, Foundry, as part of the company’s streamlining strategy and amidst venture capital taking a hit globally. Naspers will continue the investments it has made through the four-year-old fund, including successful start-ups such as online home-cleaning business SweepSouth, Naked Insurance, Aerobotics, and WhereIsMyTransport. “The global investment environment, as well as the local SA one, has changed, and we have made clear the need for our business to adapt. In line with changes across the wider business, we have reviewed our early-stage investment strategy within SA to bring it in line with our international approach,” a Naspers spokesperson said.

The collapse on Friday of Silicon Valley Bank: By the end of 2022, Silicon Valley Bank, also known as SVB, was the 16th-largest bank in the United States, with over $200 billion in assets and $340 billion in client funds. Its main objective was financial assistance to fast-growing startups, particularly those in the tech and healthcare industries.

SVB had an asset, liability mismatch, banks borrowing short term and lending long term, that was unprotected by a run-on liquidity. A tougher operating environment for Venture Capital firms led them to withdraw deposits. The bank started to sell long dated bonds to generate liquidity, but yields have spiked. They launched a capital raise, but this caused panic. On 9 March, the SVB saw withdrawals of around $42 billion; the next day the bank was taken over by the Federal Deposit Insurance Corporation (FDIC). Meanwhile, the US government has underwritten all deposits overnight, with the FDIC kicking off an auction process for SVB’s assets.

Markets: A strong recovery from the rand on Friday as the dollar retreated, closing 1.35% stronger at R18.30 on the day. The currency and has started the week around R18.20. Brent crude is trading at $83.02 a barrel.

Looking at the week ahead: US Consumer Price Index (CPI) is important economic data to be released on Tuesday. In South-Africa, Mining Production & Sales figures will be released on Tuesday with retail sales to follow on Wednesday and Consumer Confidence on Friday.

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