However, such turnaround may lead to new concerns and challenges going forward. Today’s event thus provides an opportune occasion for us to deliberate and exchange views on this topical issue. 3. Although latest economic data point to stronger growth momentum and smaller tail risks, uncertainty and short-term threats still remain. For example, the situation in Europe can easily come back to take centre stage thus providing a reality check and a pointed reminder that structural problems take time to resolve. Besides, anti-austerity pressure could delay ongoing reform efforts. This may, from time to time, raise uncertainty and spark volatility in the market. Meanwhile, improving economic outlook in the US needs to be tempered with reality of the fiscal drag and the near-term risk from spending cuts which can come back to hit market sentiment. Thus, we should proceed with care since the market has somewhat overly priced in the global recovery story. 4. The challenges from the great rotation can be viewed in two dimensions. First, risk preference has shifted from safety to riskier assets with the improved global sentiment. Particularly, global stock markets have rallied far beyond the modest global recovery. This can be seen in the MSCI World Index which surged by almost 25% during the last 9 months while global growth remains at low level. 5. Rallies in stock prices on the back of over optimistic sentiment may sow the seeds of potential bubble.
Pongpen Ruengvirayudh: Challenges in the rotating world Keynote address by Ms Pongpen Ruengvirayudh, Deputy Governor of the Bank of Thailand, at the Thomson Reuters FX Awards Ceremony 2013, Bangkok, 27 March 2013. *  *  *  Distinguished guests, Ladies and Gentlemen, 1. It is an honour for me to join the Thomson Reuters 2013 FX Awards Ceremony today. I would like to take this opportunity to congratulate the winners of the FX awards this year and to thank all market participants, as well as Thomson Reuters, for your contribution to the development of the Thai foreign exchange market. For the winners of the awards this year, one is reminded that the awards are given not only for the outstanding achievement on business grounds, but also as recognition of the notable efforts in enhancing market efficiency. So a hearty congratulation for a job well done! 2. As you know, much has happened over the past few years, both at the global level and within the Thai economy. The global economy has shown signs of improvements, although in a measured pace, but reactions from the financial markets seem to run ahead of developments on the grounds. For many of us who have seen the global economy and financial markets over many business cycles, such euphoria and exuberance can be expected whenever global risk sentiments improve and investment strategy shifts toward more risk- taking. Today, a new theme or the so-called “The Great Rotation”, has taken the center stage.