AIRLINK 86.21 Decreased By ▼ -0.99 (-1.14%)
BOP 4.97 Decreased By ▼ -0.05 (-1%)
CNERGY 4.08 Decreased By ▼ -0.01 (-0.24%)
DFML 37.22 Decreased By ▼ -0.68 (-1.79%)
DGKC 91.20 Decreased By ▼ -2.68 (-2.85%)
FCCL 22.99 Decreased By ▼ -0.78 (-3.28%)
FFBL 33.74 Increased By ▲ 1.07 (3.28%)
FFL 9.19 Decreased By ▼ -0.06 (-0.65%)
GGL 10.05 Increased By ▲ 0.02 (0.2%)
HASCOL 6.25 Decreased By ▼ -0.29 (-4.43%)
HBL 126.25 Increased By ▲ 4.33 (3.55%)
HUBC 158.29 Increased By ▲ 12.64 (8.68%)
HUMNL 11.08 Increased By ▲ 0.58 (5.52%)
KEL 4.64 Decreased By ▼ -0.10 (-2.11%)
KOSM 4.09 Decreased By ▼ -0.10 (-2.39%)
MLCF 38.25 Decreased By ▼ -0.55 (-1.42%)
OGDC 133.40 Decreased By ▼ -1.61 (-1.19%)
PAEL 25.40 Increased By ▲ 0.32 (1.28%)
PIBTL 6.22 Decreased By ▼ -0.05 (-0.8%)
PPL 119.25 Decreased By ▼ -0.43 (-0.36%)
PRL 24.58 Increased By ▲ 0.48 (1.99%)
PTC 12.28 Increased By ▲ 0.06 (0.49%)
SEARL 59.32 Decreased By ▼ -0.48 (-0.8%)
SNGP 65.60 Increased By ▲ 0.60 (0.92%)
SSGC 9.87 Decreased By ▼ -0.18 (-1.79%)
TELE 7.85 Decreased By ▼ -0.02 (-0.25%)
TPLP 9.49 Decreased By ▼ -0.25 (-2.57%)
TRG 63.80 Decreased By ▼ -0.50 (-0.78%)
UNITY 27.26 Increased By ▲ 0.21 (0.78%)
WTL 1.28 Decreased By ▼ -0.04 (-3.03%)
BR100 8,343 Increased By 33.1 (0.4%)
BR30 26,460 Increased By 509.8 (1.96%)
KSE100 78,810 Increased By 9 (0.01%)
KSE30 25,474 Increased By 35.6 (0.14%)

WASHINGTON: Investors may have become overly complacent about financial conditions, creating the risk of a sharp downturn in markets, the IMF said Wednesday.

While policymakers must keep interest rates low to ensure economies recover from the Covid-19 crisis, they also must remain vigilant about potential problems, the IMF cautioned in the latest update to its Global Financial Stability Report.

“Financial stability risks have been in check so far, but we cannot take this for granted,” said Tobias Adrian, head of the IMF’s Monetary and Capital Markets Department.

With borrowing rates at record lows and new vaccines boosting hopes of a solid recovery in activity this year, prices for stocks, corporate bonds and other risky assets have risen globally, while markets have shrugged off new waves of coronavirus infections.

Adrian said the concern is that values have become “stretched,” pointing to the tech sector where “we’re detecting some frothiness.”

Technology companies have seen a huge increase in share prices, as many have benefitted from the pandemic and trends towards shopping online and working from home.

In US markets, the S&P information technology sector jumped 42 percent in 2020, while increases among major companies were stunning: Apple surged 82 percent, Amazon 76 percent, Facebook 33 percent and Google-parent Alphabet 31 percent.

Markets are “betting that continued policy support will offset any bad economic news in the short term and provide a bridge to the future,” Adrian said. But the “disconnect between exuberant financial markets” and the lagging economic recovery “raises the specter of a possible market correction.”

The Washington-based crisis lender, which projects global growth will recover by 5.5 percent this year, has hammered home the message that governments should continue to provide as much economic support as possible.

“Reducing or withdrawing support at this stage could jeopardize the global economic recovery,” Adrian said.

However, policymakers must be watching for “unintended consequences” of stimulative policies.

Comments

Comments are closed.