November 17, 2021
Markets

New trends in global capital markets

This article is part of The IFF China Report 2021

Several new trends are emerging in the global capital markets. During the global financial crisis that began in 2007–08 and the Covid-19 pandemic in 2020, fiscal and monetary stimulus policies were adopted by governments on a massive scale. However, no significant improvement was seen in the real economy because all funding was driven towards capital markets. As a result, asset prices were affected while the capital markets decoupled from the real economy. For example, in January 2021, the market value of US stocks was 185% of US GDP – a record highThe price/earnings ratios for the US stock market have increased by a factor of 33.91, the highest since the 2000 dotcom bubble.

There is also a willingness within capital markets to take greater risks in pursuit of higher returns. The most important reason behind…

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