Wednesday, January 6, 2010

>Emerging country risk is still overvalued by the markets (NATIXIS)

Probably because of historical habits, financial markets still consider emerging countries to be riskier than OECD countries: this can be seen from the level of risk premia and the reaction of financial markets when risk aversion rises.

This is maybe still true overall, but in many cases it seems to us that emerging countries as investment vehicles are at least as solid as OECD countries today, considering the situation of foreign trade, public finances, growth prospects, technological progress, education, demographics and now the solid monetary management in emerging countries and the exchange-rate policies.

We take as examples the cases of Brazil and Spain, and look at the relative risk of these two countries.

To read the full report: EMERGING COUNTRY RISK