There is a survey out from the Bank of America stating the risk considered by institutional investors is very high compared to the year 2008. Almost every time this survey is realized by Bank of America and people find it nearby risk declared by them. This risk can be converted into an opportunity for long-term investors. So, let’s discuss in detail in this article, that what are the risks impacting the global stock market and what should investors do during this condition.
Risks indicated by Bank of America:
i) Hawkish central banks:
- Inflation is the biggest concern for the central banks as they keep raising the interest rate, if the high inflation and high-interest rate prevail then it will directly give birth to another risk called Recession risk.
ii) Recession Risk:
- A rising interest rate scenario will ultimately affect the GDP growth rate and if there is negative GDP for two consecutive quarters then it will be called a recession.
ii) Geopolitical Tension:
- The war between Ukraine and Russia is impacting the world. It is looking like a divided place as China is on the downside of Russia which has a major economy and force in the overall world.
- China has increased its supply chain so the dependence on China is much higher compared to 30 years back. Russia and China are on one side and the other western world is on the other side, this will surely have an impact.
- If war between Ukraine and Russia will take place then the analysis, we are doing right now will mean nothing as we will be finished, we are a nuclear world now and war between nuclear nations will be a disaster for the world but normally and rationality will prevail things will be better in near future.
- These are the 3 major risks to the stock market, economy, and GDP which can act as an opportunity for the long-term investors, the financial crisis which happens due to this will be converted into an opportunity.
- This is not the first time the world is facing consequences but, in the past, also there are many crises had taken place like in 2011 the sovereign debt funding of the European Union become wrong and a physical clip of the US happened in 2012-13. China's hard landing in 2013-14, the Geopolitical crisis 2014-15, the Donald Trump election, the biggest Covid-19 pandemic 2020-21, Ukraine and Russia war, and Hawkish inflation.
What should investors do?
Index level during the earlier crisis in the past had also tumbled and after sometimes index fall in place, rationality and common sense will prevail, and investors should always keep in mind their financial goals and risk-taking capacity and invest attentively.
Disclaimer: The information here is provided for reference purposes only and should not be misconstrued as investment advice. Under no circumstances does this information represent are commendation to buy or sell stocks or MF.
Originally Published On:https://blog.investyadnya.in/what-are-the-risks-impacting-global-stock-market-what-should-investors-do%ef%bf%bc/