Liquidity-driven stock market rallies are coming to an end following the tapering of rapid fire money printing at most major central banks, warns the Association of Securities Companies.
“We’ve been in the quantitative easing [QE] era since 2008 with money flooding stock markets across the globe, but the magnitude of cash pumping is gradually being scaled back and the liquidity surplus era is ending. We should no longer expect offshore fund flows to drive stock markets,” said Pattera Dilokrungthirapop, the association’s chairwoman.
The US Federal Reserve is leading its major counterparts in winding down QE and lifting its policy rate, while money pumping by other central banks is falling, said Mrs Pattera.
Excess liquidity in global financial markets has resulted in record highs for a number of bourses around the world. Even though the benchmark Stock Exchange of Thailand index has not recorded a new low since the 2008 financial crisis, it has more than doubled from 784.24 points in January 2008.
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