Blackrock sees riskier outlook for major emerging markets
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[July 18, 2014]
LONDON (Reuters) - Political
instability and a worsening economic outlook mean major emerging
markets such as Argentina, Brazil and Russia are riskier places to
invest, according to a closely watched index.
According to asset manager Blackrock's quarterly Sovereign Risk
Index, the three months to the end of June favored developed markets
such as Belgium and Britain, which rose in the rankings, while key
emerging markets fell.
Brazil dropped four places to 31st out of 50 countries, attributed
by Blackrock to rising levels of short-term debt. Russia fell three
places to 24th, on "a decline in its perceived government
effectiveness" and worsening economic prospects.
Argentina, locked in a row with investors refusing to accept write
downs of sovereign debt arranged as part of a restructuring, fell
one spot to 45th from the previous quarter.
The index is made up of a mix of quantitative measures, such as debt
to gross domestic product (GDP) and tax revenues, alongside
qualitative assessments like the perceived effectiveness and
stability of governments.
Investors and economists have become increasingly concerned about
political instability in many emerging markets following flare-ups
of civil unrest in a lengthening list of countries such as Brazil,
Thailand, Egypt and Turkey.
Blackrock set up the index in 2011, after the credit crunch and
against the backdrop of a debt crisis in the euro zone that centered
on Greece, seeking to provide investors a more in-depth measure of
how risky sovereign debt was.
But while some emerging markets slipped in the rankings, a number of
developed economies' rankings in the index benefited from the
International Monetary Fund raising growth forecasts.
Belgium moved up four places to 27th, Britain rose three to 20th and
the Netherlands moved up two to 11th.
[to top of second column]
(Blackrock Sovereign Risk Index country rankings, Top 10 and Bottom
10, June 2014:)
1 Norway 41 Ireland
2 Singapore 42 Hungary
3 Switzerland 43 Slovenia
4 Sweden 44 Italy
5 Germany 45 Argentina
6 Taiwan 46 Portugal
7 Finland 47 Ukraine
8 Canada 48 Egypt
9 New Zealand 49 Venezuela
10 Australia 50 Greece
(Reporting by Chris Vellacott; Editing by Louise Ireland)
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