Economists are calm, even if equities are not
There are reasons why equity volatility may be ignored in the real world, but economists cannot entirely ignore the moves in financial markets.
THE start of 2016 has been a turbulent time in the world's equity markets. The world's economies have been far less volatile. Once again, economics and markets seem to be moving in different directions. This divergence may well continue.
The relationship between equities and economies is a lot looser than people think - the Standard & Poor's is not a barometer for the health of the US economy, the Nikkei tells us little about Japan and the FTSE has barely a hint of a British accent. Here are five reasons why equity volatility may well be ignored in the real world:
In the United States, listed companies account for perhaps 15 per cent of economic activity. This matters because a lot of economic growth is coming from small companies at the moment - it is small companies that are behind the momentum of the European and the American economies.
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Columns
‘Competition for talent’ a poor excuse to keep key executives’ pay under wraps
OCBC should put its properties into a Reit and distribute the trust’s units to shareholders
Why a stronger US dollar is dangerous
An overstimulated US economy is asking for trouble
Too many property agents? Cap commissions on home sales
Time to study broadening of private market access