Allianz expects stock market collapse and financial disaster in the banking sector

The insurance company Allianz warned of the risk of a financial disaster in the banking sector due to high interest rates, the U.S. banking crisis and its consequences. The company expects a sharp decline in the stock market, as well as recession in the U.S. in the second half of the year.

According to the opinion of the chief economist of the company Ludovic Subran, which reports to RBC referring to Bloomberg agency, the sale of shares will last not one month. A precondition for it threatens to become that investors who previously bought papers on borrowed money will be unable to pay on loans. Financial difficulties at non-bank intermediaries (such as hedge funds) will worsen the situation.

The expert said that the crisis in the U.S. banking system raises serious concerns. The reasons for the current situation, he said, are not only in the tight monetary policy of major central banks, but also in the incorrect approach to risk management.