23 – 29 September: A new set of political risks could keep the market on its toes

Just when the market thought that the risk premia related to political and policy uncertainties (e.g. trade tensions between the US and China, Brexit, etc.) would not widen further to a meaningful degree, a new set of risks entered the equation. News that the Democratic Party in the US is set to start the impeachment process against President Trump and further intensifying economic distress in Germany dented appetite for risk assets. On Friday and during the weekend, rumours surfaced that the White House are (internally) mulling ways to limit US investors’ portfolio flows into China. As the implications of the impeachment and limiting portfolio flows into China are a challenge and a half to estimate, markets globally could remain jittery.

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