The highest market risk in 10 years and BlackRock’s Forecasts

It is interesting to look at all sorts of goods that predict market risk or uncertainty, with results of the U.S. presidential election on the doorstep. The implied volatility in the Chinese Yuan (CNH) is a proxy of market risk that is commonly perceived. The slightly more seasoned investor and trader use this proxy and expect the largest fluctuations in over 10 years. The volatility of the Yuan is now twice as high during the previous presidential election as the implied volatility. In recent months, the Chinese currency has upgraded sharply against the US dollar. This is partly a reflection of the strength of the Chinese economy and of the enormous stimulus produced by the FED. This year, the buying power of Americans has dropped considerably.

On Monday, the shares began the week well with a broad-based increase. For instance, the S&P 500, after its worst week since March, had a strong rebound. Shares have increased by more than 1 percent in Hong Kong, Australia and South Korea. But the chance of major swings remains in the market until Wednesday-Thursday, of course. In the US presidential race, Wall Street hopes to have a definite winner by then. It also seems like the British are gambling heavily on the US presidential race. There are also people who have invested more than £1 million on a Biden win via the British gaming companies. Gambling does not mean much of itself, of course, but it does offer a picture of how the crowd stands in the presidential election in the United States.

BlackRockPredictions

The US-based global investment management corporationBlackRock predicted a Democratic victory. This goes hand in hand with tighter monitoring controls and more fiscal stimulus around COVID-19. This will have a negative effect on the value of the dollar, which is why BlackRock views future investment opportunities in Asia and the Emerging Markets. If Biden were to become the next U.S. president, according to BlackRock, international trade will become even more predictable, playing into the cards of Asia and the Emerging Markets.

Wall Street also anticipates a Biden win, according to BlackRock. This translates into an Asia Pacific MSCI Index that for the past two months has outperformed its US counterpart. BlackRock notes a rotation from US stocks and products to its counterpart in Asia.BlackRock quotes Asian policy as a final statement. Asians seem much better at keeping the coronavirus in place, which has almost restarted their economy. On the other hand, the West still failed to keep the coronavirus under control.

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