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Matt Goodson: Salt Funds Management expert on global markets stabilising after this morning's announcement · Best of Business

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  Speaker 2: Well, it looks like share markets around the world have
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  Speaker 2: stabilized after making those big losses over the last couple
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  Speaker 2: of days or so. Over the last few hours, the
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  Speaker 2: nick has bounced back. It's sitting almost ten percent higher
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  Speaker 2: than yesterday. Currently, Australia and South Korean markets are also up.
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  Speaker 2: The INSIDEX had dropped early in trading since has since
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  Speaker 2: climbed back. Matt Goodson is managing director at Salt Funds
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  Speaker 2: Management and with us Now Hoy.
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  Speaker 3: Matt Afternoon Heat.
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  Speaker 2: What's prompted the recovery?
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  Speaker 3: Look, I think yesterday's sharp move, especially in Japan, really
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  Speaker 3: felt like force selling from funds that had too much
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  Speaker 3: exposure and we're just forced to d risk and so
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  Speaker 3: we've just seen a bit of a natural rebound from that.
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  Speaker 3: But the real weakness in Japan started a few days
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  Speaker 3: ago when the central Bank finally hiked after years of
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  Speaker 3: zero rates, moving up to a quarter of a point
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  Speaker 3: cash rate and making some pretty hawkish comments about the
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  Speaker 3: future and that a Japanese market have been pretty strong
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  Speaker 3: all year of a yen have been really weak, and
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  Speaker 3: that just turned everything around. Some market fell hard and
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  Speaker 3: the yen really strengthened.
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  Speaker 2: Do you think this is the end of the Jesses
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  Speaker 2: or do we potentially have more to come.
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  Speaker 3: Look several different things going on at the moment, so
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  Speaker 3: I think it's too early to say it's the end.
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  Speaker 3: The biggest impact from Japan is actually the implications for
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  Speaker 3: global markets. There's been a multi trillion dollar trade going
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  Speaker 3: on for years, known as the carry trade, where people
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  Speaker 3: have borrowed at zero in Japan, geared that up a
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  Speaker 3: few times and invested in much higher yielding assets overseas.
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  Speaker 3: I think American banks, Australian banks, those sorts of things.
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  Speaker 3: Now all of a sudden they have to pay a
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  Speaker 3: bit more to borrow that money, and more importantly, they
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  Speaker 3: have to pay it back and much more expensive yen.
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  Speaker 3: So all of a sudden, a lot of those carry
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  Speaker 3: trades have been unwound. And that's why we saw well
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  Speaker 3: one of the reasons why we saw US and Australian
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  Speaker 3: mark it's been really hard hurt yesterday, Matt, it's.
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  Speaker 2: Very good to talk to you. Thank you so much
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  Speaker 2: for that. Matt Goodson, Salt Funds Management, Managing Director.
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