SSgA head of active quantitative equity in Asia Pacific Olivia Engel said following a prolonged period of calmness, complacency and low volatility, a market’s reaction to disappointment is likely to be more violent.

Ms Engel said the decline in September was driven by “global nervousness around European and Chinese growth rates, anxiety around ISIS and Ebola, US mid-term election outcomes, and banks in Europe”.


“September was the third-worst monthly return for the Australian equity market in 20 years, but the sharp rebound in October recaptured almost all of the drawdown,” she said.

Ms Engel said while investors expected the hardest hit segments of the market to have the strongest recovery in October, this was not the case.  

“In fact, the defensive higher-quality parts of the market were outperformers in both months,” she said.

The worst hit segments in Australian Ms Engel said were small caps, mining, mining services, media and retail.

These sectors also underperformed again during the recovery in October, she said.  

The most resilient sectors in September – telecoms, health care, utilities and transport – were also the strongest performers during the October recovery, with the exception of utilities, she said.

“REITs also did well, but banks were the biggest winners in October,” she said.

“The net winners over the two-month period were healthcare, telecoms, REITs and staples.”


SSgA warns on investor complacency
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