BNY’s Bob Savage notes that equities show the clearest recovery in risk appetite, though holdings remain below mean reversion, especially in South Korea and Taiwan. Developed markets are rebounding faster than emerging markets. The report highlights that a sustained recovery in South Korean and Taiwanese equity holdings would signal a broader normalization in global risk sentiment.
Risk-on flows and Asian tech lag
“As risk-driven flows continue, equity markets remain the asset class where a risk recovery is the most apparent on a level basis. However, our holdings data indicate that there is still quite some distance to go before full mean reversion. This is the case for both emerging and developed market equities, but on a relative basis developed markets are recovering more strongly.”
“Taiwan and South Korea were among the most-affected equity markets globally: they were faced with a difficult combination of a high beta to the global AI theme and severe adverse exposure to energy supply difficulties. Both were extremely overheld heading into the conflict, and the impact was clear: South Korean equities dropped almost 40 percentage points (of the rolling 12-month average) from peak to trough and have only recovered a small fraction of the losses. This represents a key source of financial conditions tightening as new BoK Governor Shi Shin Hyun-song takes the reins.”
“Taiwan’s drop was smaller, but the recovery is similarly negligible. Out of all the risk barometers, we believe a holdings recovery in these two markets would be the clearest sign of a global return to normality in risk sentiment.”
“Robust global demand, with only light outflows in Canada, Czechia, South Korea and the Philippines. Significant inflows were seen in Australia, Norway, Sweden, Brazil, Mexico, Chile, Hungary, Türkiye, China and Taiwan. In EM, industrials, consumer staples, financials, IT and utilities all recorded strong inflows.”
“iFlow Mood advanced further into risk-on territory at 0.258, driven by accelerated equity demand, nearing its mid-February 2026 highs.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Source: https://www.fxstreet.com/news/equities-risk-recovery-and-asia-tech-focus-bny-202604211309
