ECB's Schnabel sees 'disconnect' between stock market valuations and geopolitics
Isabel Schnabel Highlights Market Risks and Economic Uncertainties
LONDON, May 7 (Reuters) - European Central Bank board member Isabel Schnabel said on Thursday that there appeared to be a disconnect between record stock market valuations and the risks facing the global economy.
Disconnect Between Markets and Geopolitical Risks
"There really seems to be a kind of disconnect," she said at an event at the London School of Economics. "One could question whether ... markets are possibly a bit complacent here," about the impacts of the Iran conflict.
Market Assumptions on Energy Supply Chains
Schnabel said markets appeared to assume that damage to energy supply chains from the Iran war would be rapidly reversed - something she viewed as unlikely - and had very optimistic expectations for productivity gains from artificial intelligence.
Concerns Over the Private Credit Sector
Current Size and Systemic Risk
• She also touched on concerns around the private credit sector. She said it was too small for now in Europe to bring systemic risk.
Need for Greater Transparency
• There needs to be greater transparency on the sector though before it reaches a systemic scale.
Reporting and Editing
(Reporting by David Milliken; editing by Marc Jones and Chizu Nomiyama)