Watch out for the Black Swan! Events that can destroy financial markets
Black Swan is a term that refers to events that are unexpected and can have an impact on financial markets. There are at least 3 conditions that make an event referred to as black swan, namely the possibility of a low occurrence, has a significant impact on financial markets, events cannot be predicted by many people.
Here are 7 black swan events that have occurred in the world.
1. The 1997 Asian Financial Crisis
One of the factors that made the Asian crisis occur was Thailand’s decision to release the Baht exchange rate against the USD. The decisions made turned out to have a chain effect and eventually a currency devaluation in all countries in Southeast Asia and East Asia. At that time most Asian currencies dropped by 38% and the stock market in the world declined by 60%.
2. The decline of the NASDAQ Index in 2000
With the growing and widespread use of the internet in the world, existing online businesses continue to experience rapid increases. The company’s share price continues to show an increase and this is evident from the NASDAQ index, an index focused on technology sector companies, which rose from 1,000 points in 1995 to 5,000 in 2000.
When the NASDAQ index is at the top, then there are several companies like Dell and Cisco that sell their shares. This triggers panic selling and consequently in just one month the NASDAQ index falls freely to the level of 1114.11.
Even though to date many technology companies have continued to succeed until now, such as Amazon, eBay, and Netflix. As a result of events above many technology companies were destroyed at the time.
3. The bankruptcy of Lehman Brothers in 2008
Lehman Brothers is a financial services company that has long been established and occupies the position of the largest investment bank in the United States.The unexpected thing happened in 2008, where Lehman Brothers revealed bankruptcy. At that time Lehman Brothers had assets of USD 639 billion and debts of USD 619 billion.
The bankruptcy of these seasoned financial services companies revealed the ugliness of property sector debt certification practices in the US financial system.
With this incident, high investor concerns over other large financial institutions will be destroyed.
The relief was that the chain effect of this event was avoided, because the American government began distributing funds to bail out the troubled financial companies.
However, the public views the actions taken by the United States government are not good. This is because many people think that the tax funds they pay are given to rich people who are not entitled to receive them.
4. Greek Debt Crisis in 2010
In 2010, when the world financial markets were struggling to recover from the previous financial crisis. Greece announced that their country had a hidden budget deficit. So as to make market confidence begin to decline and in 2012, Greece declared the statement of default on the largest government debt ever in the world.
The situation above continued to deteriorate in 2015, where Greece became a developed country that first failed to pay debt repayments to the International Monetary Fund (IMF). This incident caused financial markets to take spontaneous action which had an impact on the stock market in Hong Kong and London.
When this event happened many global investors and traders hunted for gold and bonds when news began to rise. This is because gold and obilitation are considered safe haven for the funds they have.
Although at present the global financial markets are starting to improve from the Greek debt crisis. The worrying thing is that Greece is still dependent on debt to handle its financial problems. The Greek economy is in recession and unemployment is everywhere.
Until now many traders who trade the Euro currency in the forex market continue to be careful if there is a meeting of Greek debt renegotiation in economic news.
5. Fukushima Nuclear Disaster in 2013
Japan is a country that has a geographical position that makes it often experience earthquakes and tsunamis. The earthquake that occurred in 2013 which resulted in the leakage of installations of nuclear power plants in Fukushima.
When this happened the community began to be traumatized by the Chernobyl incident in 1986 which destroyed Eastern Europe and radiation contamination that still remains today.
At the time of this incident NIKKEI 225 experienced a drop of 14 percent and this was the worst decline in the last 40 years. Not just that, because Dow Jones in the United States has decreased to 1.15 percent.
At present Japan has begun to deactivate most of the nuclear installations for a while. Even worse is the leakage of the nuclear plant in Fukushima has not been one hundred percent tackled to date.
6. The revocation of the Swiss Franc Pegging in 2015
Before 2015, the Swiss Franc exchange rate was equal to 1.20 per Euro. The Swiss National Bank, acting as the Swiss central bank, abruptly revoked the pegging and lowered the deposit rate.
The announcement from the Swiss Central Bank was very shocking to the financial world and made the Swiss Franc shot by 30% compared to the Euro and jumped 25% compared to the US Dollar.
The move taken by the Swiss Central Bank turned out to hit the stock market in Europe and make the Swiss stock index continue to decline by 10 percent in a short time.
When compared with other events, the policy of the Swiss central bank has the worst impact felt by forex traders. This event made many forex traders who went bankrupt and the forex brokers who lost money and finally went bankrupt.
7. The exit of the UK from the European Union in 2016
At the time before the results of the Brexit referendum were announced, many analysts who considered Britain would remain within the European Union. They also think there are still many British people who agree to remain within the European Union.
It turns out that the predictions predicted above missed, many British people who agreed to get out of the European Union compared to survive. At this time Poundseterling began to decline and was at the lowest level since the last 31 years compared to USD.
Until now, market participants continue to observe every development carefully and carefully. They continue to be aware of the smooth Brexit and EU negotiations and the health of the British economy.
That is the 7 Black Swan events that have a profound impact on world financial markets.
Hope to inspire!