Market Risk Sinks Even as Political Uncertainty Reigns
2016 was a year of surprises, with multiple financial and geopolitical events that rattled markets around the world. The precipitous decline of the Chinese market in January pushed most major benchmarks' returns down and sent risk to the highest levels of the year, amid further concerns about China's economic slowdown.
While markets rebounded and their volatilities receded for most of the second quarter, stocks dropped again and indices experienced another spike in risk following the unexpected result of the UK referendum at the end of June. This drop, however, was short lived, and markets rebounded quickly as volatilities fell to pre-Brexit vote levels in less than three months.
Equity markets have posted strong gains since November 8th and the year concluded with multiple benchmark returns in the black, some at record highs, while volatilities remained relatively low.