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The
post-Brexit rebound across risky assets is largely due to
central bank intervention, Citi says.
"Beneath a veneer of a stability, the system is becoming ever
more highly sprung," said Citi's Matt King in a note to clients.
The U.S. bank warns that of the adverse side effects of such
interventions, such as the disconnect from fundamentals and
investors' inability to benefit from diversified portfolios as
cross-asset correlations spike higher.
The benefits to asset prices are also starting to fade.
While UK equities have benefited from a weaker sterling,
European and Japanese stocks are stuck despite the expansion of
balance sheets by the respective central banks.
(Reporting by Adela Suliman, Editing by Vikram Subhedar)
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