Impact of rising rates, inflation, price correction, drop in IPOs: the Financial Markets Authority on Thursday listed the risks encountered by the markets in 2022, and which could persist in 2023.
During a press conference on Thursday, AMF Secretary General Benot de Juvigny listed the risks of a correction in the markets, shocks, risks linked to indebtedness, deteriorating financing conditions, vulnerabilities that are appearing, the impacts of the rise in rates (by central banks, Ed.) of which (the AMF) thinks that not all have materialized yet.
Firstly, the AMF observes a persistent risk of an overall correction in the prices of equity and bond market assets, a symmetry which is not usual, underlined Benot de Juvigny while the volatility of the markets bonds increased significantly due to the central banks’ monetary tightening policies.
The risk of a stock market pullback is due, according to the AMF, to a macro-financial environment which has been very substantially modified by monetary normalization, a lasting rise in inflation and the interest rate curve which has been substantially modified after a decade of low interest rates, all of which challenge the markets to adapt.
Another concern for the market supervisor is superimposed: a long-term attrition of the markets: IPOs are extremely low in 2022 and at the start of 2023, while there are exits from the stock market and few capital increases.
In terms of financing the economy, the discipline of the equity markets, the transparency, the financing capacity that they provide make it an asset, in particular for all financing of new technologies, however underlined Mr. Juvigny.
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The war in Ukraine and the international context have caused strong tensions on the commodity markets, starting with grain and energy. If strong relaxations are now observable there, the volumes (of sales, Ed) which are carried out voluntarily, outside the markets, have increased significantly since the beginning of 2022, calls out to the chief economist of the financial policeman, Kheira Benhami.
Some buyers and resellers prefer to conclude their transaction bilaterally rather than on public platforms.
As for taxpayer households whose protection the AMF is responsible for, savings rates have been rising for several months (after a peak linked to confinements in the face of the Covid-19 epidemic, Ed.) no doubt (…) relative to so-called precautionary savings, observes Benot de Juvigny.