Report
Patrick Artus

Does a crisis in one asset class lead capital to switch to other asset classes or does it lead all asset classes to fall by correlation?

This is a very important question. Consider for example the case of an (inevitable) growth slowdown in the United States, leading to a fall in US share prices. Will it result in: A return of capital to Europe and emerging countries and an improvement in these markets; A fall in all financial markets triggered by the fall in US share prices? The answer seems to be that: In the event of a small shock, investors shift from one asset class to another (as is being seen for example at present between the United States, Europe and emerging countries); In the event of a large shock, all markets fall (like in 2008-2009). This suggests that a mere slowdown in US growth - without a recessi on - would cause capital to return to Europe and emerging countries.
Provider
Natixis
Natixis

Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.

 

Analysts
Patrick Artus

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