Egypt tops list of risky emerging markets

Egyptian hieroglyphicsEgypt has topped a list, alongside Venezuela, of the most risky emerging markets based on factors including currency risk and internal and external balances.

The ranking comes from UK-based asset manager Standard Life Investments, which compiled a “heat map” of the world’s emerging markets as a guide for investment in 2016.

“Venezuela and Egypt, with pegged or inflexible exchange rate regimes, remain the countries where our heat map shows risks are highest,” says Jeremy Lawson, chief economist.

In contrast, Brazil and Malaysia lowered their risk score this year by improving their balances.

Standard Life Investments says emerging markets face a difficult year in 2016 due to low commodity prices, higher short-term US interest rates, a strong dollar and a slowdown in Chinese economic growth. However, there have been some improvements.

“Looking forward, widespread currency depreciation has helped to reduce external imbalances in many countries, although domestic imbalances remain widespread and will take much longer to be addressed,” says Lawson.

©2015 funds global mena

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