Macroscope | Saudi crisis, trade war, rising interest rates – there are plenty of fault lines in global markets but no catastrophe … yet

Hannah Anderson says there is plenty of sour economic news to go around, but for the time being, disruptions – mainly in the form of disputes over trade, currency manipulation and geopolitics – look temporary

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A trader at the New York Stock Exchange on October 11 – a day when US stocks suffered deep losses in volatile trading. Photo: Xinhua

Published: 11:00am, 19 Oct 2018Updated: 10:46pm, 19 Oct 2018

Ever since I moved to Hong Kong, any headline related to Asia in the local news prompts my parents to reach out. For them, Asia really only makes the headlines in the event of extreme weather or a natural disaster – earthquakes, in particular, receive a lot of coverage.

Any tremor, no matter how small or how far away from Hong Kong, warrants a call. Given the US Geological Survey has recorded more than 10,700 earthquakes so far this year, the vast majority in the Pacific Rim, I have received a lot of calls. I appreciate my parents’ concern, but every call goes the same way as I try to convince them that whatever shock was just reported is, in fact, just a tremor.

This recurring conversation has been on my mind this week since it closely resembles the concerns about markets recently dipping. Episodes of market volatility, just like seismic events in the Pacific Rim, are normal. Tectonic plates shift to relieve stress along fault lines and sometimes this adjustment creates a genuine natural disaster.

More often than not, though, these shifts are short-lived and do not do much damage – 87 per cent of the recorded earthquakes this year were less than a 5 on the Richter scale (a low-level earthquake). The same is true for sell-offs.

As we move further into a late cycle, volatility tends to rise. Several factors could be to blame for the next market tremor.