28 Apr 2016
RORO is back: Risk on – risk off resurfaces - HSBC
Research Team at HSBC, suggests that the risk on – risk off (RORO) is back.
Key Quotes
“In the years since the 2008 financial crisis, markets have been dominated by global forces, with local differences playing a secondary role. RORO was the most notable of these, with its impact peaking between 2010 and 2013. As QE became an increasingly important driver of markets, RORO’s influence started to wane.
However, this shift has reversed in 2016: At the start of the year, concerns over the Fed hiking cycle, falling oil prices, and Chinese growth led to a big risk-off move. As these worries have receded, markets have flipped to risk-on. RORO has returned. Risk on – risk off is once again the single most important driver of markets.”
Key Quotes
“In the years since the 2008 financial crisis, markets have been dominated by global forces, with local differences playing a secondary role. RORO was the most notable of these, with its impact peaking between 2010 and 2013. As QE became an increasingly important driver of markets, RORO’s influence started to wane.
However, this shift has reversed in 2016: At the start of the year, concerns over the Fed hiking cycle, falling oil prices, and Chinese growth led to a big risk-off move. As these worries have receded, markets have flipped to risk-on. RORO has returned. Risk on – risk off is once again the single most important driver of markets.”