HSBC Middle East has issued a timely warning to its clients in the region to expect increased volatility in financial markets as the Iraq crisis reaches its climax.
The bank warns that foreign exchange markets are likely to experience higher volatility as a result of reduced liquidity. This will typically increase buy/sell spreads that might give clients leaving overnight orders with a nasty shock the next day.
Thus HSBC suggests that clients keep overnight orders to a minimum over the next few weeks, and review all orders on a regular basis.
However, the bank also reminds its clients that they should consider what the financial markets are likely to do once any hostilities cease.
It notes that the markets are currently pricing in uncertainty, and that once a more certain future returns that will probably bring a significant correction in many markets. In particular, dollar buyers could return, equity markets recover and bond markets get sold off.
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HSBC warns clients to expect volatility in markets
- Wednesday, March 12 - 2003 at 09:48
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Greater volatility may leave overnight currency buyers with a nasty shock the next day. And the cessation of hostilities may be an important turning point for currencies, bonds and equities.
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HSBCWednesday, March 12 - 2003 at 09:48 UAE local time (GMT+4)
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