No market turmoil ahead suggests Axioma risk review

Analysis firm Axioma says its Insight Quarterly Risk Review of eight markets and regions has found risk continued to ease across the world in the fourth quarter of 2012, and does not see any signs of risk increasing in the near term.

The Review covers Asia Pacific ex-Japan, Australia, China, Japan, emerging markets, Europe, global developed markets and the US.

Europe’s peripheral markets were among those to experience the sharpest drops in risk, suggesting improvements for investors who can now focus on fundamentals when considering assets, rather than see all assets tarred with the same fear of risk.

Axioma said that medium-horizon risk for Greece, Spain, Italy, Portugal and Ireland fell 9%.

North America saw risk fall in the Russell 1,000 and Russell 2,000 in the fourth quarter. However, forecast risk for large-cap US stocks is on par fith the FTSE Emerging index. That contrasts with a year ago, when the Russell 1,000 was at a risk level well below the Emerging index.

Short and medium-horizon risk also fell for the FTSE Asia-Pacific ex-Japan, Axioma said.

“It is a testimony to these uncertain times that a decrease in risk seems only to stir anxieties over the possibility of an unforeseen increase. But as Freud observed, sometimes a cigar is just a cigar. There is no evidence in Axioma’s risk models of an upturn in risk on the horizon,” said Melissa Brown, senior director Applied Research and co-author of the Quarterly Risk Review.


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