In cinematic terms, the third quarter offered investors more tension-building moments than over-the-top action scenes. As our previous Market Risk Insights suggested was likely, the three-month period played out against a backdrop of apparent calm, disturbed only by brief spikes of volatility and risk aversion.
Even the surprise twist of the June Brexit vote turned out to be more red herring than plot developer as the onset of the northern summer apparently eased investor nerves.
However, early in September the first aggressive global stock sell-off for some time alerted the market audience to the danger lurking below the serene summery surface. If September woke investors once again to risk – triggering some significant bouts of cross-asset liquidation and sharp deleveraging – the effect was short lived with the fourth-quarter reel opening to familiar scenes of market torpor.
But despite the lack of drama over the previous quarter, there are plenty of potential scenarios that could inject a greater sense of urgency into the current stage of the story.
ESG exclusions: a behind-the-screen analysis
Looking into 2017 with Hermes Investment Management