Bailey McCann, Opalesque New York:
Risk trended upward after 5 consecutive quarters of declining volatility, driven by concerns over macro events such as the US Federal Reserveís change in QE policy, Chinaís slowing economic growth, and the continued measures of Japanís central bank to stimulate its economy, according to the latest Axioma Insight: Quarterly Risk Review.
The impact of the concerns was reflected most strongly in China and Japan, though the rest of Asia also reacted negatively, pointing to a possible shift in the focus of economic worries from Europeówhich dominated headlines a year agoóto Asia. Ironically, reaction to the comments from the US Federal Reserve was stronger in Asia than it was in the US, though uncertainty regarding US market intervention led to an increase in volatility and asset-asset correlations in both US and Asian markets, which then spread to other markets around the world.
The latest quarterly results contrasted with those of the first quarter, when investors largely ignored macro concerns, including the threat of US sequestration, panic in Cyprus and weak job growth. Late June saw a sharp increase in volatility in Chinese equity markets, as a steep rise in interbank lending rates followed Chinese government efforts to clamp down on that countryís shadow banking system, which has allowed excessive credit growth outside of the regulated lending markets.
"Risk in most markets is still fairly low, relatively speaking," not......................
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