2023-09-01 10:12:43 ET
Global equities ( URTH ) can expect to see up to a 10% correction in the second half of this year if economic data points towards weakness and if central banks keep raising rates, said Nouriel Roubini, chairman and CEO at Roubini Macro Associates.
He told Bloomberg that a 10% correction is not "totally unlikely" and adds that rate hikes will essentially push bond yields higher.
"With core (inflation) being still high in the U.S., UK, Europe, and central banks hiking somehow more, I would not be surprised within the second half of the year to get the 10% correction in global equity markets," said Roubini.
Commenting on China’s growth potential, Roubini said that it is now expected to be around 3% to 4%, down from what it used to be between 5% and 10%, as it prioritizes security control over opening up and reforms.
"Well, in China, the reduction in growth is not cyclically structural; it has to do with aging of population, debt and leverage, housing overhang, state capitalism, a backlash against the private sector, the difference in sentiment of household and the corporate, geopolitical depression, the policies that are effectively Marxist-Leninist of Xi Jinping and so on," he said.
A 10% drop in S&P 500 ( SP500 ) ( NYSEARCA: SPY ) ( IVV ) ( VOO ) would bring the benchmark index to around 4,080, a little lower than most Wall Street bear scenarios.
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Roubini says 10% correction in global equity markets not 'totally unlikely'