THE Metropolitan Bank and Trust Co. (Metrobank) said that volatility in the markets will likely to persist this year given the still highly uncertain situation especially in the euro area.
Pauline Revillas, Metrobank research analyst, said that markets may struggle to make
headway while the euro crisis remains unresolved, especially as the global macroeconomic outlook is weaker.
“Indeed, market sentiments will still likely be vulnerable to the slightest sign of further trouble in the euro zone. The downside risks for global equity markets still look much greater than any upside risk, with the priority that investors will put on preserving capital over making big returns further likely to limit market gains,” she said in a research note.
However, if the global economic situation turns positive, Asian stocks, which took a battering last year, could rebound strongly given the region’s relatively healthy economic growth prospects, Revillas added.
Last year saw global stock markets bleed with big declines, with almost all equity markets ending the year lower than their levels at the start of 2011. Worldwide, only nine out of 92 selected stock indices made gains of any size in the past year.
The Philippine Stock Exchange, just like other bourses in emerging markets, was not immune to the volatility as flight-to-safety factors and broader concerns about the impact of the downturn in Europe on the global economy contributed to declines in the main index.
The risk aversion that accompanied every negative news on the euro crisis had a knock-on effect for emerging-market equities, which investors typically consider high risk.
Because of the dramatic shifts in risk appetite, emerging market bourses performed rather poorly relative to their advanced economies counterparts. Furthermore, the appreciation of the greenback against emerging market currencies in the second half weighed on the equity markets.
“But then again, all the bets are on the quick solution to the eurozone crisis. If things worsen further, then all bets are off and a blood bath will happen which is seen to be much worse than the post-Lehman collapse,” Revillas said.
Pauline Revillas, Metrobank research analyst, said that markets may struggle to make
headway while the euro crisis remains unresolved, especially as the global macroeconomic outlook is weaker.
“Indeed, market sentiments will still likely be vulnerable to the slightest sign of further trouble in the euro zone. The downside risks for global equity markets still look much greater than any upside risk, with the priority that investors will put on preserving capital over making big returns further likely to limit market gains,” she said in a research note.
However, if the global economic situation turns positive, Asian stocks, which took a battering last year, could rebound strongly given the region’s relatively healthy economic growth prospects, Revillas added.
Last year saw global stock markets bleed with big declines, with almost all equity markets ending the year lower than their levels at the start of 2011. Worldwide, only nine out of 92 selected stock indices made gains of any size in the past year.
The Philippine Stock Exchange, just like other bourses in emerging markets, was not immune to the volatility as flight-to-safety factors and broader concerns about the impact of the downturn in Europe on the global economy contributed to declines in the main index.
The risk aversion that accompanied every negative news on the euro crisis had a knock-on effect for emerging-market equities, which investors typically consider high risk.
Because of the dramatic shifts in risk appetite, emerging market bourses performed rather poorly relative to their advanced economies counterparts. Furthermore, the appreciation of the greenback against emerging market currencies in the second half weighed on the equity markets.
“But then again, all the bets are on the quick solution to the eurozone crisis. If things worsen further, then all bets are off and a blood bath will happen which is seen to be much worse than the post-Lehman collapse,” Revillas said.
Comments
Post a Comment