How quickly the world forgets.
Just 13 days ago, markets were reeling from Dubai World’s request for a debt standstill.
But last week investors were already clamouring to ratchet up the risk, according to UBS’s Global Risk Radar.
The index increased from 0.97 to 1.22 standard deviations above its mean last week, putting it firmly in `risky’ territory. Most of the move coincided with a drop in the Vix, from 25 to 21, and increases in the MSCI AC World index of 2.4 per cent.
Just to give you a bit of historical context here’s a chart of recent action in the Risk Radar:
It’s worth adding that UBS claims its risk radar to be a contrarian indicator when it reaches more than 1.3 standard deviations. That’s when the index is showing investors are very willing to take risk, which is historically when the index has given its best sell signal, according to the Swiss Bank.
On that note, it looks like investor sentiment might get an additional uplift on Tuesday morning.
Headlines fresh from Dubai:
09:17 08Dec09 RTRS-DP WORLD RECOUPS MOST OF EARLY LOSSES AFTER DUBAI FINANCE CHIEF SAYS FIRM ABLE TO MEET OBLIGATIONS
09:28 08Dec09 RTRS-STOCKS NEWS MIDEAST-DP World shares recover on fin min statement
REUTERS: DUBAI FINANCE CHIEF SAYS DUBAI SUPPORT FUND HAS GIVEN NAKHEEL 9 BLN DIRHAMS TO MEET ITS OBLIGATION
Update: Scratch that. Newest headlines:
RTRS: DUBAI WORLD 9 BLN DIRHAM ($2.45BLN) INJECTION “NOT NEW MONEY” – DUBAI WORLD SOURCE
DUBAI WORLD 9 BLN DIRHAM INJECTION WAS MADE AS PART OF $!) BLN GOVT AID TO STATE ENTITIES LAUNCHED IN FEB – SOURCE
Which means Nakheel is in as much trouble as ever.
Anyone still feel risky?
Related links:
The Dubai fear factor – FT Alphaville
The morning after the sandstorm before… – FT Alphaville