Damocles Update: Who is at Risk? (Focused Thinking by Nomura Research, 5 min listen)

(You can listen to the podcast by clicking here)

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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