A Stock Market crash — how soon? Will this trigger Blockchain technology be further embraced?
In a recent survey by UBS wealth management involving 3,400 investors, it was found that 55% thought there will be a major correction for equity markets in 2020. Thus, UBS is holding 25% CASH in its portfolios. The US Stock Market has recently been trading at an all-time high while what is referred to as the ‘fear index’ (VIX), is trading lower and lower, sparking concerns that equity markets may be being too complacent!
VIX, the ‘fear index’ — are equity markets too complacent?
Source: Bloomberg/ Chicago Board Options Exchange
Randy Frederick, Vice President of trading and derivatives at Charles Schwab, recently said, “When you see a huge amount of complacency and excessive optimism especially from certain participants in the market, that’s when you oftentimes tend to get a snapback in the other direction’.
So, what could trigger a stock market fall? There are a number of geo-political factors that are of concern:
· US-China trade war
· global debt — “Spiralling toward another debt crisis”? Not to mention the $17 trillion of negative yielding debt globally
· BREXIT — if seen as a positive for the UK economy, could this lead to pressure in Europe for substantial reform? Or, other countries may too opt out of Europe leading to additional instability and uncertainty
· Middle East — Iran, with over 150,000 soldiers “It has a major influence — verging on a controlling influence in some cases — over the affairs of Syria, Lebanon, Iraq and Yemen, it could be a threat to this region”, as reported by the BBC
· Hong Kong — how long will China allow the rioting to continue before it ‘cracks down’?
· 10 year equity bull market — nothing lasts forever
Finally, let’s briefly turn our attention to property. How many times do you hear this being such a safe investment, even though it is very difficult to gain exposure to this asset class? (given the cost of buying a property, especially in many of the world’s capital cities). However, is this asset, too, on the turn? Knight Frankpredicted in a report in 2018 what could potentially…
