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

Post

Slowdown in 2023, except for Chinese cities

Growth across advanced Asia Pacific cities is slowing down in 2022's second half, and their full-year growth rates will trend downwards in 2023. In emerging Asian cities, we expect an uptick in growth in 2022, followed by a marked weakening in 2023.

Find Out More

Post

European cities face a tough winter as recession spreads

Strong annual GDP growth figures for most major European cities do not tell the whole story in 2022 as the economic environment across Europe has continued to deteriorate in the second half of this year. We expect technical recessions across most major European cities in H2 2022 and into Q1 2023.

Find Out More