Global equity pull-back risks rise
Global equity market sentiment has started the third quarter on a strongly optimistic tack, supported by a raft of dovish policy statements from the world's major central banks and strong US payrolls data last week. The Sentiment Barometer Index (SBI) - which quantifies behavioural investment biases including overconfidence, as well as momentum - has edged into excessive optimism territory in this region. Readings on the Philippines, Thailand and Taiwan are now above 95. In the last 18 months, an MSCI Asia ex-Japan SBI of above 95 has been followed by an average 2 per cent pullback in the index in the subsequent 20 days.
David McBain is a strategist at Absolute Strategy Research