ALMOST half of UK stock market investors fear that markets are seriously overheating, raising fears that a major world wide economic crash is imminent, a survey revealed yesterday.
CFA Society, a ‘money managing’ organisation surveyed 530 stock market experts and found that 49% of them feared that stocks were ‘overvalued’, this is a massive increase from when the same survey was carried out three months ago.
Three months ago a mere 10% of those surveyed feared the markets were ‘overvalued’.
The UK’s blue chip index soared to a 14-year high last week and markets in the US have gone into ‘uncharted waters’. The massive surge in stock market values signifies a dramatic collapse is looming.
Meanwhile head of the Bank of England, Mark Carney, warned that the so-called ‘recovery’ of the UK economy faces a ‘triple threat’.
The first is the European wide economic crisis, the second is the threat from China’s booming economy and the third is a ‘fresh wave of market volatility’ triggered by rising interest rates.
However, Carney warns that bigger than all three external threats is an even more dangerous internal threat. Carney said that the ‘biggest risk’ to the UK economy lies with the every increasing housing bubble which is set to burst.
With the price of an average home rising at a staggering £10,000 a month, he warned: ‘The biggest risk to financial stability, and therefore to the durability of the expansion – those risks centre in the housing market, and that’s why we are focused on that.
‘We don’t want to build up another big debt overhang that is going to hurt individuals and is very much going to slow the economy in the medium term.
‘We would be concerned if there were a rapid increase in high loan-to-value mortgages across the banks . . . we have seen that creeping up and it is something we are watching closely.
‘The level of higher loan-to-income mortgages, ones above four and a half, five times loan-to-income, potentially could store up bigger problems for the future and we need to be careful’.