Market assets refer to financial instruments or commodities that are actively traded in markets and have a market-determined price. These are assets that investors buy and sell based on supply and demand.
Remark: Global Liquidity Index is not cover on Market assets
Types of Market Assets
- Equities (Stocks)
- Shares of companies traded on stock exchanges.
- Bonds
- Debt instruments issued by governments or corporations.
- Commodities
- Physical goods like gold, silver, oil, wheat.
- Currencies (Forex)
- Exchange of different national currencies.
- Cryptocurrencies
- Digital assets like Bitcoin, Ethereum.
- Derivatives
Key Characteristics
- Price determined by market forces (not fixed by central banks).
- Liquidity varies: Some assets (like gold or Bitcoin) are highly liquid; others are less so.
- Risk spectrum: From safe-haven assets (gold) to high-risk speculative assets (crypto).
Difference from GLI:
GLI measures monetary liquidity from central banks, not the value of market assets. However, changes in liquidity influence the prices of market assets because they affect investor behavior and risk appetite.
table comparing GLI components vs market assets and their roles in the financial system
| Category | Item | Role in Financial System |
|---|---|---|
| GLI Components | Federal Reserve (FED) | Provides USD liquidity, influences global monetary policy |
| GLI Components | European Central Bank (ECB) | Controls Eurozone liquidity and interest rates |
| GLI Components | People’s Bank of China (PBC) | Manages RMB liquidity, key for emerging markets |
| GLI Components | Bank of Japan (BOJ) | Influences Yen liquidity and global carry trade |
| Market Assets | Stocks | Ownership in companies, growth and income generation |
| Market Assets | Bonds | Debt instruments for funding governments and corporations |
| Market Assets | Commodities (Gold, Silver) | Safe-haven and industrial use, inflation hedge |
| Market Assets | Currencies (Forex) | Facilitates global trade and exchange rates |
| Market Assets | Cryptocurrencies | High-risk speculative asset, decentralized store of value |
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flowchart of the relationship between GLI, investor behavior, and asset performance
Here’s the flowchart showing the relationship between GLI, investor behavior, and asset performance:
- GLI Up (Liquidity Expands) → Risk-On Behavior → Investors allocate to Crypto ↑, Stocks ↑ (especially small caps), while Gold stays neutral or rises slightly as inflation hedge.
- GLI Down (Liquidity Contracts) → Risk-Off Behavior → Investors move away from risk → Crypto ↓, Stocks ↓, and Gold ↑ as a safe haven.