During October and November, we could see up to a 10 percent correction in developed equity markets and 20 to 25 percent in emerging equity markets, said Bob Parker of Credit Suisse.
“What we’re saying now is take risk off the table,” Parker told CNBC.
“It’s time to start de-risking portfolios because there will probably be a correction in equity markets on a consolidation in credit markets during October and November. I don’t think this is the beginning of another bear run, I just think there could see quite a significant correction.”
CNBC Data Pages:
Parker said the substance behind the recent rally is from an improvement in corporate earnings and liquidity flowing back into markets, “particularly in emerging markets.”
“If we look at valuations, notably in emerging markets today, we’ve moved from being very cheap in March to the middle range," he said.
According to risk models, Parker said risk positions taken by investors are looking overextended and the markets are overbought.
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Disclosure:
No information was available for Parker or his firm.
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