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Industry considers new risk model
13 March 2012
Annabelle Palmer considers whether the time is right for a wholesale reconsideration of the way risk is evaluated across the globe
As developed nations struggle with stagnant economic growth and crippling debt, emerging markets have become ever more appealing. The traditional division between the two categories long ago lost its traditional meaning and, depending on the conceptualisation of risk, emerging markets may be considered safer destinations for investment.
“The possibility of international investors turning away from buying US dollar bonds was unthinkable five years ago, yet now it is a reality. [Asset classes] once considered to be risky, aren’t so risky, and what was considered to be totally without risk, is now quite risky,” says Gary Greenberg, head of Hermes’ global emerging markets team.
Many emerging countries, such as Taiwan, China and South Korea have established tremendous foreign exchange reserves and financial strength that nobody five years ago would have predicted, he says. Likewise, countries such as Qatar and the UAE have among the highest per capita incomes in the...
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