Stock Markets Have Rallied, But Risks Remain

The recent global sell-off in equities reflected a range of factors – some one-offs, some ongoing

Peter Gee 21 February, 2018 | 7:34AM

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World equity and bond markets fell in recent weeks, and although equities have recovered somewhat since, the episode is a reminder that expensive assets are at risk as we come to the end of ultra-low yields.

The recent global sell-off in equities reflected a range of factors – some one-offs, some ongoing. Among the one-offs, the pace of equity price rises in January had simply been unsustainably fast: As just one example, the MSCI Emerging Markets Index had risen by very nearly 10% between the start of the year and January 26. Ten percent growth per month if maintained would have trebled prices in a year. Greater realism was always going to interject.

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About Author

Peter Gee  is a Fund Analyst for Morningstar Australia

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