Global asset prices remain stretched and are vulnerable to a big fall as investors grow more concerned about geopolitical risks, the Bank of England said on Wednesday.
The BoE said overall risks to British financial stability were unchanged compared with its last assessment in June, but that it would be wrong to draw comfort from a rapid rebound in asset prices after a drop in August.
“Valuations across several asset classes, particularly equities, quickly returned to stretched levels following the episode. Markets remain susceptible to a sharp correction,” the BoE’s Financial Policy Committee said in a quarterly statement.
“Global vulnerabilities remain material, as does uncertainty around the geopolitical environment and global outlook,” the BoE said.