WASHINGTON, Feb. 4 (Xinhua) -- Investor sentiment and behavior across the world changed from "risk-off" to "risk-on" mode in January with Japan's asset purchase programs on the way, said a global financial industry report on Monday.
The Institute of International Finance (IIF) said in its monthly report that capital flowed away from safe-haven assets like U.S. Treasuries to riskier assets including equities and high- yield bonds.
Noticeably, global corporate bond issuance reached a record 409. 5 billion U.S. dollars in January, after an unprecedented level of issuance of almost 4 trillion dollars in 2012, according to the Capital Markets Monitor report.
The Washington-based industry group cautioned that credit risk may be underpriced again as in the period prior to the 2007-2009 financial crisis. It may be particularly applicable in the euro area, where economic divergence between stronger core members and those on the periphery appeared to be persisting.
The IIF noted that the U.S. economic recovery was still fragile given a very sizable increase in delinquency rates in the 1- trillion-dollar U.S. student loan market in recent years. It also predicted the possible spending cuts starting from March may translate into a 0.6-percentage-point drag on growth, which is an important downside risk to the consensus estimate of an around-2- percent growth this year.
The IIF, which consists of over 450 members in more than 70 countries and regions, began to monitor the capital market in March 2009 in the aftermath of the 2008-2009 financial crisis. The report aims to assess systematic risks, suggest ways to mitigate risks and contribute to enhancing financial stability.