The dynamics that warrant reduction in equity risk exposures include:

  1. Late cycle dynamics leading to marked global growth slowdown
  2. Bearish signals from the bond market
  3. More constrained reflationary policies from China that will be a less potent for jump-starting global growth than in 2008 and 2015
  4. Heightened geopolitical uncertainty; with the Sino-U.S. strategic rivalry being the most market relevant
  5. The fear of diminishing returns to traditional growth inducing monetary policy tools
  6. Less global policy coordination to combat global crises
  7. Declining global liquidity in the first half of 2019

You can read our 2019 analysis of institutional investor derisking trends, Battening Down the Hatches, Part 1 here: FIS Research: Battening-Down-the-Hatches-Part-1.pdf

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