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01st Oct, 2014

Real Risk and Market Risk: A Mismatch of Perceptions?

The world faces a number of geopolitical crises: ISIS threatens the stability of Iraq, Syria and the rest of the Middle East; war is fracturing Ukraine; the Ebola virus continues to gain momentum in West Africa; and China is becoming more bold as it clashes with its neighbours over ownership of the South China Sea.

In our report, Trident Real Estate Capital examines the impact of these geopolitical crises on the Australian economy. We conclude that the markets are at significant risk of being complacent, as participants have not adequately responded to price in the current levels of inherent risk. The report submits that this behaviour is partly explained by the lax monetary environment as well as the unprecedented demand from foreign investors dampening any potential external shocks.

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