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Investors rush into high-risk assets in easy credit environment

Vast liquidity released by central banks flowing into shadow banking sector

SPAC, Cryptocurrency, and CLO booms rise warning stage all over the world.(Source photo by Reuters)   © Reuters

TOKYO/ NEW YORK -- High-risk assets have recently become the investments of choice as global markets swim in liquidity while interest rates remain at historic lows, spurring worries about another financial crash.

The recent collapse of Archegos Capital Management, a New York investment fund which last month defaulted on highly leveraged margin calls, triggering a massive fire-sale of stocks, shows the risk involved in such trades. Its collapse rippled out to institutions across the world, causing hefty losses.

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