Europe Stock Volatility Underprices Rising Political Risk: Chart

European equities have proved relatively calm, even as Italians prepare to vote on a constitutional referendum and the campaigns to choose the next French and German leaders are under way. While a BNP Paribas SA gauge measuring the level of geopolitical risk priced in by euro-area assets has soared, the VStoxx Index of equity volatility has dropped 20 percent since a high earlier this month. Stock swings are currently underpricing political risk, the French bank said in a note this week.