Source Title: IMF warns global asset prices are at risk of a correction
Xinhua news agency, Washington, January 27 (reporter Gao panxu yuan) – the International Monetary Fund (IMF) issued an update to the global financial stability report on January 27, warning that the disconnection between financial markets and the real economy is still continuing, and that once investors reassess the global economic growth prospects or policy prospects, global asset prices may face the risk of correction.
The IMF said that although the number of new confirmed cases in the world continues to rise and the world economic outlook is still uncertain, with the development and promotion of vaccines, the market’s expectation of economic recovery has been improved, pushing up the prices of risky assets. However, before the vaccine is widely spread, the recovery of financial market and economic recovery still rely on policy support.
The report warned that when investors’ economic growth expectations or fiscal and monetary policy expectations change, global asset prices may face the risk of a correction. This kind of risk combined with the fragility of financial market may lead to a chain reaction of market confidence and endanger the global macro financial stability.
According to the update released on the same day, the risk of global financial stability is still controllable, but the crisis has exposed certain vulnerabilities, including the rise of corporate debt level, the aggravation of the vulnerability of non bank financial sector, the expansion of sovereign debt scale and the decline of profitability of banking system in some countries.
The IMF said it was still necessary to continue to provide policy support to curb the epidemic and further threaten the global financial system. The international community should be committed to multilateral cooperation, promote global vaccine research and development and fair distribution, ensure a balanced and comprehensive economic recovery, and strengthen the stability of the financial system.
The global financial stability report is usually released during the IMF’s annual spring and autumn meetings, and is updated in the current year and at the beginning of the next year.