‘People Can Get Quite Complacent’: They’re Asleep In Asia Too, By The Way

The market is not always rational. When we have events happening, then sometimes the market will overshoot on the pessimistic side and everyone runs scared. But if they are not happening, people can get quite complacent.

That’s from Jian Shi Cortesi, an Asian equities portfolio manager at GAM Investment Management in Zurich, who spoke to Reuters about subdued volatility in Asian markets.

By now, you’re probably acutely aware that suppressed vol. is by no means a U.S. phenomenon and it’s certainly not confined to equities.

But just to drive the point home on Sunday evening as Asian trading gets underway, we thought it was worth showing the charts referenced in the above-linked Reuters piece.

One index that gets a mention is VXFXI, which, simply put, is just the VIX for the China large-cap ETF. As Reuters notes, it’s “been at 18% for much of the year, the lowest since 2014”:

VFXI

Reuters also flags one-year implied vol. on the Indonesian rupiah, which is the lowest since 2012. Also worth noting: USDIDR 1-month implied volatility dropped to 9-year low late last month.

USDIDR

Talk about “carry” on.

And of course, this discussion wouldn’t be complete without mentioning South Korean CDS spreads, which as Reuters reminds you, “have been subdued at between 42 basis points and 57 basis points since late 2016, half their levels in September 2015 when Pyongyang was merely talking about improving its nuclear arsenal.”

KoreaCDS

“All quiet on the Eastern front.”

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2 thoughts on “‘People Can Get Quite Complacent’: They’re Asleep In Asia Too, By The Way

  1. “The waiting is the hardest part”, Tom Petty and the Heartbreakers on the music streaming device couldn’t be more apropos. Had a fine day of progressive discussions and partying, the mood is like a held breath. Convergence is coming, which way will win, the waiting is the hardest part.

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