Damocles Update: Who is at Risk? (Focused Thinking by Nomura Research, 5 min listen)
Nomura has developed an early warning indicator of currency crises called Damocles. It tracks thirty emerging markets and in part back-test, part live performance has signalled two-thirds of the last 54 crises. Nomura finds that currently six countries are in the danger zone: Sri Lanka, Turkey, Pakistan, South Africa, Argentine, and Ukraine.
Why does this matter? With low rates, many are turning to Emerging Markets, but not all EMs are alike. Nomura provides a handy list of countries to consider avoiding.
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)
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