BNY’s Bob Savage highlights a clear recovery in risk appetite within global equities, with developed markets rebounding faster than emerging markets, according to holdings data analyzed by BNY [1]. Despite this recovery, equity holdings remain below mean reversion, particularly in South Korea and Taiwan, which were among the most affected markets globally due to their high beta to the global AI theme and adverse energy supply exposure [1]. South Korean equities experienced a drop of almost 40 percentage points (of the rolling 12-month average) from peak to trough, and have only recovered a small fraction of these losses, signaling ongoing financial conditions tightening as the new Bank of Korea Governor Shi Shin Hyun-song assumes leadership [1]. Taiwan’s decline was smaller, but its recovery has also been negligible, with BNY suggesting that a sustained recovery in these two markets would indicate a broader normalization in global risk sentiment [1].
The report notes robust global demand for equities, with only light outflows observed in Canada, Czechia, South Korea, and the Philippines. Significant inflows were recorded in Australia, Norway, Sweden, Brazil, Mexico, Chile, Hungary, Türkiye, China, and Taiwan. In emerging markets, sectors such as industrials, consumer staples, financials, IT, and utilities saw strong inflows [1].
BNY’s iFlow Mood index advanced further into risk-on territory, reaching 0.258, driven by accelerated equity demand and approaching its mid-February 2026 highs [1]. This suggests increasing investor confidence and appetite for risk assets, although full mean reversion in holdings has not yet been achieved, especially in key Asian tech markets [1].
CONCLUSION
Global equities are showing signs of risk recovery, with developed markets leading the rebound. However, South Korea and Taiwan remain laggards, and their sustained recovery would signal a broader normalization in risk sentiment. The market takeaway is cautiously optimistic, with robust inflows and rising risk appetite, but full normalization has yet to occur.