New index identifies periods when global stock markets might decline

Researchers have found a way to measure the likelihood of global stock market losses by identifying periods in which shocks may be more likely to spread across many national markets. This "fragility index" identifies periods in which international equity markets are more susceptible to widespread pull-backs by identifying common risk exposures. The index identifies when systemic risk exposure is high in markets across multiple countries, and shows an increasing probability of a global stock market draw-down.

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