Aside from slowing growth, China has an unknown amount of bad debt piled up from bank lending to projects encouraged by the Chinese government during the financial crisis.
However, Premier’s Mr Robbins doubted this could be the trigger for a rise in volatility and a global crisis.
“The Chinese government has the fire power to bail out the Chinese banking system,” he says.
Ms Hudson too pointed to a growth shock out of China as a risk factor, or indeed out of the US, where she highlighted the sustainability of the housing market as a potential issue.
“The withdrawal of liquidity of any kind can be a market event,” she said.
“This could be triggered by a realisation by investors of trends already happening, such as lacklustre profits growth and company investment.”
However, as an active investor, Ms Hudson is not particularly nervous because correlations between risky assets have fallen, providing “long-term fundamental investors more potential for adding value through proper analysis”.
Mr Robbins, however, finds it hard to identify a catalyst that could “fundamentally rattle” the markets at the moment.
The re-emergence of inflation would be a problem for markets, but this seems “extremely unlikely in the short term”, he says.
On the contrary, some countries in Europe, such as Spain, are dealing with deflation.
The Ukraine/Russia situation and the Syria crisis might have been expected to have caused stress to global markets, yet they have had little effect. “The market is willing to discount any exogenous event,” observes Mr Robbins.
“While central banks continue to pump liquidity into the market, low volatility could last for a very long time until a negative catalyst comes along to shake it up,” he adds.
So what could be the catalyst for volatility to rise? “An unknown unknown,” he counters.
“But the problem is the longer volatility remains low, the more risk is building up in the financial system and the more painful and sharper it will be when it unwinds,” explains Mr Robbins.
“It feels eerily similar to 2007 in some ways – we will see.”
