Risk Appetite Data Still Rising

by Michael J. Howell14. January 2014 21:12
Risk Appetite can be measured by deviations of actual portfolio composition away from average levels, country-by-country. We do this now for more than 50 markets Worldwide by subtracting Government bond exposure from equity exposure, normalising the result and expressing it in index form. The index tends to range between +/- 50: risk asset markets tend to peak out around an index of 40 and readings of 30 and above suggest some prudence needs to be taken. Latest end-2013 puts developed markets at 17.1 and emerging markets at minus 3. Japan has fallen back to 10.3, but the UK exceeds 22 and the US at 30.8 is straying onto more volatile ground. The party is not over yet, but it may be about to get more rowdy! For full list see CBC Add-in database.


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