Researchers at HSBC, a multi-billion dollar banking group, issued an official warning against investors in regards to a potential stock market crash that may replicate the impact of 1987’s “Black Monday.”
On October 11, global stocks declined in value, alerting various stock markets and financial institutions for a plausible stock market crash.
During an interview with Bloomberg, HSBC global equity strategist Ben Laidler explained that the current performance of major stock markets are vulnerable to various risk factors that are highly likely invisible to the eyes of investors.
“We think markets are pretty vulnerable,” stated Laidler.
According to Bloomberg and RT, other major research organizations and financial firms including Citigroup told investors that if the contemporary levels of both the Dow Jones Industrial Average and S&P 500 declines, the market could be exposed to serious vulnerabilities.
“As long as those levels remain intact, the bulls still have a slight hope,” HSBC technical analysis head Murray Gunn’s team told Bloomberg. “But should those levels break and the markets close below (which now seems more likely), it would be a clear sign that the bears have taken over and are starting to feast,” they conclude.
Gunn sent a separate note to HSBC clients that a Red Alert has been issued, in consideration of a market crash of various stock markets in the US.
“With the US stock market selling off aggressively on October 11, we now issue a RED ALERT. The possibility of a severe fall in the stock market is now very high,” said Gunn.
With the instability of financial markets of the European Union and the stock markets in the US, a safer alternative for both regular and high profile investors seem to be bitcoin, which has significantly outperformed mainstream assets since early October.
Keeping in mind that the value of bitcoin is completely based on its market demand, a wiser option for investors is to hold onto bitcoin until the stock markets recover. Considering the high liquidity and rising price of bitcoin, it is a strong replacement to stocks and bonds that are struggling as of now.
Sources: RT, Bloomberg
Image Credit: Bloomberg TV