Global | Financial market risks – real, but maybe overstated

Financial market risks – real, but maybe overstated

Concerns have risen about financial market risks, centring around elevated asset valuations and high corporate debt. A lack of corporate distress and low interest rates suggest no cause for panic. But a growth scare or a rise in bond yields – perhaps due to higher inflation – could change the picture.

What you will learn:

  • Standard equity valuations are in the top 1% seen in the last 150 years, and there has also been a surge in M&A activity in recent quarters involving highly leveraged deals. Corporate debt in the advanced economies has soared since early 2020, and US high-yield debt issuance is at record levels.
  •  If we take low interest rates into account valuations for equities, commercial property, and high yield bonds – while still mostly rich – look less extreme than they first appear.
  •  M&A flows as a share of world GDP, while high too, are below
    previous cyclical peaks.
Back to Resource Hub

Related Services

Seoul, South Korea

Post

BoK’s monetary policy to tighten even as hiking cycle ends

Even without rate hikes, central banks' monetary policies can effectively tighten if the nominal neutral rate falls below the policy rate. We expect this will be the case for the Bank of Korea this year, as the gap between the policy rate and the nominal neutral rate widens.

Find Out More

Post

China: Emerging green shoots in Spring, but not out of the woods

We now incorporate a faster recovery from the post-Covid exit wave and raise our 2023 full-year GDP growth forecast to 4.5% (from 4.2% previously).

Find Out More