Standard Life Investments, the global investment manager, has found that the risk profiles of emerging economies have changed considerably in the past six months.
Countries such as Mexico and India generally look safer now, while conditions in already risky countries like Brazil and Malaysia have deteriorated further. The largest reduction in vulnerability was in Ukraine and Russia, thanks partly to better management of monetary policy, although this could change if there is a re-escalation of conflict between the two countries.
Investing in Emerging Markets continues to prove challenging and volatile, but Standard Life Investments has produced a heat map to assess the vulnerability of emerging market economies to future shocks. The map and research will be updated every six months to help investors and fund managers improve their understanding of the large amounts of economic and financial data and potential threats currently facing emerging markets.
Jeremy Lawson, chief economist, and Nicolas Jaquier, Emerging Markets Economist for the Emerging Market Debt team created the heat map in October 2014 and produced an update in May 2015 which incorporates data following the two main shocks in recent months – the collapse in oil prices and sharp rise of the dollar.