Emerging-Market Risk Is at Lowest Level Since 2007

(Bloomberg) -- Emerging-market risk is at its lowest since December 2007 as volatility in equity markets declines, independent research firm CreditSights Inc. said, citing its CountryScore model for financial crises in such economies. The average CountryScore risk fell for the 10th consecutive month in October, slipping to 0.33 percent from 0.53 percent at the end of September, New York-based analyst Joey Bortfeld wrote. Risk peaked at 3.17 percent in December last year, according to Bortfeld.

Risk currently “is comparable to the end of 2007, a period when the crisis was beginning to brew, but still well before the real ramp up,” Bortfeld wrote. “The risks in EM have nearly fully retreated and are close to pre-crisis levels.” As well as the improvement in perceptions reflected by equities, reserves are growing, showing a 1.6 percent increase to $4.01 trillion in the 25 economies in the model, according to the report dated Nov. 4. China holds the largest reserve stockpile “by far,” at $2.13 trillion, Bortfeld wrote.

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