The standard assumption/belief that emerging markets are
riskier than advanced economies appears increasingly shaky.
FT’s Gillian Tett
has a great piece on the topic: Political risk
means all 2017 investment bets are off
Tett notes:
“Twenty years ago,
when I was a rookie reporter, a colleague told me that the “problem” with
emerging market assets was that they were irritatingly hard to value. …But the
bigger issue was politics: emerging markets were more unpredictable than
markets in Europe or America because they suffered from political risks such as
revolutions, coups and capricious demagogues — or so the theory went.
How times change. A
decade ago, investors were forced to rethink one of these assumptions when
America and Europe were engulfed by the 2008 financial crisis. Now they are
being forced to evaluate a second assumption, about political risk.
Most notably, 2016
was the year when western markets were rocked by political shocks almost as
startling as anything seen recently from the emerging markets world.”
Related:
http://vivekjayakumar.blogspot.com/2016/09/why-financial-markets-and-global.html