These Are The Riskiest Emerging Markets

Tyler Durden's picture


Update: while this was initially posted yesterday, January 28, in light of what is happening this morning, it is prudent to revisit this topic.

* * *

Now that EMs are fully in the public eye, Bank of America has updated its "most important external vulnerability indicators" table for emerging markets. The full table is below - it shows seven indicators for 55 emerging and frontier markets: four of them focus on the stocks of external assets and liabilities (FX reserves; net external position of the banking sector; net international investment position of the economy; and external debt/exports ratio) and three highlight the external funding risk (FX reserves/short-term debt ratio; current account balance; and basic balance = current account balance + FDI).

However for those who don't have the patience to pull all the numbers and compile a datatable, here is a chart which flags the highest external risk among the 10 most prominent EMs broken down by liquidity (reserves over near-term maturities) on the X-axis and capital flows (current account as % of GDP) on the Y-axis. It should come as no surprise, that Turkey is worst, followed by South Africa, India and Indonesia. China, Korea and Russia have current account surpluses and strong coverage of short-term debt by reserves. Brazil also has high reserve coverage of short-term debt. Mexico and Poland have small current account deficits and healthy reserve coverage, in addition to their IMF Flexible Credit Lines. As for Argentina, forgetabout it.


Full data:

Source: Bank of America

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Tue, 01/28/2014 - 13:39 | 4375772 Spungo
Spungo's picture

Why is USA not on this list of ghetto nations?

Tue, 01/28/2014 - 13:46 | 4375808 Sudden Debt
Sudden Debt's picture

dictator regimes are to dangerous to invest in

Wed, 01/29/2014 - 11:09 | 4379641 old naughty
old naughty's picture

Or, perhaps soon...once TPP pact signed, more outsourcing... 

Wed, 01/29/2014 - 11:39 | 4379782 SAT 800
SAT 800's picture

I hate to say it; but I think you may have hit on one reason New Yawk is going in the toilet.

Tue, 01/28/2014 - 14:00 | 4375861 TrustWho
TrustWho's picture

Reserve currency my man, almost every good in the world can basically be purchased with a US Federal note. This made a lot of sense when America was the greatest cerditor nation the world has ever seen. Of course, Bernanke, and soon Yellen, are trying to destroy the USA status as the reserve currency. Most American citizens have no idea how much they benefit. When it is gone , they may get upset.

Tue, 01/28/2014 - 14:02 | 4375872 Levadiakos
Levadiakos's picture

As long as Jamie's bonus is safe we're cool.

Wed, 01/29/2014 - 10:56 | 4379594 kaiserhoff
kaiserhoff's picture

and a lot of "bad" can be purchased with Dollars.

Why else would they be coveted by Jamie and Lloyd?

Wed, 01/29/2014 - 11:27 | 4379695 Ban KKiller
Ban KKiller's picture

Why is USA not on this list of ghetto nations?

Our books are "cooked" until they are super, duper, clean...clean...clean...and totally transparent. Full faith and all that...

Wed, 01/29/2014 - 11:32 | 4379729 The Vineyard
The Vineyard's picture

I live in South Korea.  I hope the economy doesn't tank.  I was here in 97 when all of Asia shit the bed.  Scary times.

Wed, 01/29/2014 - 11:38 | 4379771 SAT 800
SAT 800's picture

I don't know. Most dangerous markets? WTF; have you looked at New York lately? It's not dangerous enough? oh, pardon me. You like swimming with white sharks, fine, fine 

Tue, 01/28/2014 - 13:38 | 4375776 jubber
jubber's picture

Sout Africa recently hit an ATH

Tue, 01/28/2014 - 13:42 | 4375786 kodachrome
kodachrome's picture Check out this ponzi scheme. Seems groundfloorish so I put a little bit in for speculation. Except, can you call it a ponzi if it's blatently expressing itself as such? New investors pay out the old ones? I am curious to see how far this thing goes before it blows.

Tue, 01/28/2014 - 13:56 | 4375843 unrulian
unrulian's picture

Fuck off

Tue, 01/28/2014 - 14:00 | 4375865 Levadiakos
Levadiakos's picture

Looks like you picked the wrong day to wear your see thru leggings.

Wed, 01/29/2014 - 11:04 | 4379621 aphlaque_duck
aphlaque_duck's picture

A ponzi can be denominated in any currency, dollars, gold, corn, dotcom stocks, etc. 

This has been done before with bitcoin and people will keep doing it... for fun I guess? The catch is, they won't merely stop paying a return when new investors lose interest - the guy running it is going to abscond with your funds altogether.

Store bitcoin in your own offline wallet and nowhere else.

Tue, 01/28/2014 - 13:42 | 4375794 Sudden Debt
Sudden Debt's picture

cheap labor... no evirnmental rules... unstable governments... WHAT CAN GO WRONG?!?!?

Tue, 01/28/2014 - 13:45 | 4375804 101 years and c...
101 years and counting's picture

"riskiest"?  can someone explain what risk is??

Tue, 01/28/2014 - 13:48 | 4375812 Sudden Debt
Sudden Debt's picture

anything that doesn't promise a 200% return in the first 6 months!

Wed, 01/29/2014 - 10:43 | 4379521 DaddyO
DaddyO's picture

anything that doesn't promise a 200% return in the first 6 months, backstopped by a Central Bank somewhere if it doesn't!!!


Wed, 01/29/2014 - 11:02 | 4379620 KickIce
KickIce's picture

Having an illegal alien as Commander and Chief.

Tue, 01/28/2014 - 13:46 | 4375805 Joenobody12
Joenobody12's picture

This is a list of the pots. USA is in the Kettle catagory.

Wed, 01/29/2014 - 11:18 | 4379666 Panem et Circus
Panem et Circus's picture

Careful not to comment about the color of kitchen implements, that might be construed to be racist.

Wed, 01/29/2014 - 11:42 | 4379802 SAT 800
SAT 800's picture

I am a racist. and I'm not going to pretend to be stupid enough to believe people are "equal". that's just dumb.

Wed, 01/29/2014 - 12:22 | 4380020 Kirk2NCC1701
Kirk2NCC1701's picture

Define "Racist".  The kind that favors their own race or Tribe whenever possible and reasonable, or the kind who refuses to give another race an opportunity? Big difference.

Note that 'racism' is perfectly acceptable to practice (and get away with it) for other races.  Likewise, funny/witty and mild racial slurs toward whites or towards men are OK also, judging by the TV shows and movies, where these two -- especially white men -- are the butt of all jokes that deal with gender or race.

Either all races and genders are fair game (for satire) or no one is -- w/o exceptions.

Voltaire: "To find out who rules over you, simply find out whom you are not allowed to criticize."

Tue, 01/28/2014 - 13:49 | 4375818 ebworthen
ebworthen's picture

Emerging markets are being pummeled by the FED and other large central banks.

The U.S. would be Argentina or Venezuela if we didn't have the reserve currency and a lot of people volunteering to die for poppy fields and oil.

Tue, 01/28/2014 - 14:23 | 4375972 TNTARG
TNTARG's picture

You'll need Argentina, believe me.

I wish you didn't. I wish we weren't into this clusterfuck. But we are deep, deep into it.

Please, try to keep your élites to yourselves, away from down here.


Tue, 01/28/2014 - 15:28 | 4376374 Harbanger
Harbanger's picture

"Please, try to keep your élites to yourselves, away from down here."

Haha! Blame the rich.  The only elites you have left there are the socialists who run the country, anyone that could, already left to escape Peronism and Kirchner's capital controls.  She even banned gold sales so the remaining peons cant protect their savings.

Tue, 01/28/2014 - 13:52 | 4375827 Sparky_ZA
Sparky_ZA's picture

Sweet, I am from South Africa. Bad news is good........right!

Tue, 01/28/2014 - 13:52 | 4375833 Winston Churchill
Winston Churchill's picture

Only on Wall Street.

Tue, 01/28/2014 - 13:57 | 4375840 Sparky_ZA
Sparky_ZA's picture

+1 for the good news

I will say one other thing. Wish I was in America. When economies here in Africa tank .....the blood flows. Fortnately I have done my millitary training and very effective with assault rifles. Just wish I had one.

Wed, 01/29/2014 - 11:29 | 4379699 Son of Captain Nemo
Son of Captain Nemo's picture

I will say one other thing. Wish I was in America. When economies here in Africa tank .....the blood flows.

And what makes you think that just because the USDs reserve status which will insulate it through the initial global currency shocks but will ultimately lead to it's collapse like everywhere else is the better alternative?...

You want to see the worst of the worst in action?  Wait till the "Land of the Free Home of Brave" lose the only thing that is sacred in their lives and no longer have a credit or welfare card that is honored when the banks close there windows?  This Country by far is the worst scourge and pariah on the face of the earth because it has no dignity, no integrity, and no understanding of it's own history.

"Wherever you are" stay close to your family, your friends and have a plan to stay out of heavily populated urban areas -with sources for water and food.

That's it and all that matters in a nutshell.

Tue, 01/28/2014 - 13:57 | 4375847 syntaxterror
syntaxterror's picture

Nothing says "low-risk" quite like $17,272,810,445,407 in natl. debt, a corrupt legislature, and a community organizer dictator wanna be as head of state.

Tue, 01/28/2014 - 14:03 | 4375876 Hippocratic Oaf
Hippocratic Oaf's picture

You forgot unfunded liabilities if you really want to get pissed.

Wed, 01/29/2014 - 11:27 | 4379694 TruthInSunshine
TruthInSunshine's picture

Obama will have you know that the 17 trillion+ in official debt (closer to 200 trillion USD when actual figures, taking into account unfunded LIABILITIES) is perfectly reasonable given the rollout of the new MyRApe mandatory retirement saving plan confiscation scheme...errr...plan.

Wed, 01/29/2014 - 11:48 | 4379853 Johnny Cocknballs
Johnny Cocknballs's picture

the debt will never be paid back/down, power is leaking away from the US, and the goal for many in the ranks of the Fed and Treasury is simply keeping the dollar strong enough, long enough, to get the US into another middle eastern war or two.

Granted - I assume that for example the FOMC is concerned about things other than the middle class or the long term health of the U.S.

Their loyalties are to other ideals, and/or to other nations.

Tue, 01/28/2014 - 14:03 | 4375875 Make_Mine_A_Double
Make_Mine_A_Double's picture

We've had about 450 tons of bottomfish cancelled this morning for Vietnam, Ukraine and PRC so on the surface would seem things are starting to bite as each buyer noted difficulties in obtaining bank financing in each case.

When the Fed defacates the world gets covered in excrement.


Wed, 01/29/2014 - 10:22 | 4379456 eurogold
eurogold's picture

For how much longer ? This Ponzi is only teaching the World to kill the "Reserve Currency" called the U.S. Dollar faster.

Wed, 01/29/2014 - 11:44 | 4379833 SAT 800
SAT 800's picture

Yeah, we're teetering on the brink of world financial cats. number two; but fortunately most people haven't noticed yet. good post; like to hear the real news.

Tue, 01/28/2014 - 14:36 | 4376046 nonclaim
nonclaim's picture

There is an important missing piece in the LatAm financial theater: Cuba. It is a large money sink and since Venezuela's teats went dry it started sucking Brazil's harder.

Tue, 01/28/2014 - 15:18 | 4376327 Cpl Hicks
Cpl Hicks's picture

Bet it's hard to get any nourishment from a trannies tits.

Tue, 01/28/2014 - 22:21 | 4378015 laosuwan
laosuwan's picture

no  harm in trying

Tue, 01/28/2014 - 22:19 | 4378011 laosuwan
laosuwan's picture

very good observation

Tue, 01/28/2014 - 18:50 | 4377177 Iam Yue2
Iam Yue2's picture

The slump has been “fun to watch,” Thomas Stolper, the chief currency strategist in London at Goldman Sachs Group Inc., said by phone Jan. 24. "

Yes, fun to watch, as the poor get poorer...........

Tue, 01/28/2014 - 22:17 | 4378000 laosuwan
laosuwan's picture

i am really surprised at how bad the numbers look for Chile.


Simon Black call your office (saloon)


Gabon is the stand out. I am surprised Simon has not recommended it yet.


"I am just back from the airport in Gabon and boy let me tell you...blah lblah blah" You can buy a house and gold here and get a gabon passport for only 49.99 - see my website.  Plus vat of course

Wed, 01/29/2014 - 11:21 | 4379676 disabledvet
disabledvet's picture

yeah, no shit. 4 years of that meaningless bauble.

I doubt he can afford to return to the USA now.

These charts have no meanings because when you have a domino effect such as this there simply is no way to quantify risk.

European banks are at the center of this...I would avoid all them.
You should already look past the defaults at this point.

Love Citigroup here...AS A PLACE TO PUT SAVINGS.
I would not be buying the equity at this time until things "get real."

This will involve a shooting war.
Probably something big and bloody like the last time.
"Lost in a Roman
Wilderness of Pain
And all the Children are Insane."

Wed, 01/29/2014 - 10:12 | 4379416 kragsquest
kragsquest's picture

Penny stocks?  Unlimited downside risk....Does Supatcha Resources ring a bell?  And all those Chinese stocks that are basically Ponzis?

Wed, 01/29/2014 - 11:20 | 4379680 Panem et Circus
Panem et Circus's picture

Don't forget 30 yr treasuries! Well, and 10yr, and... well all of them.

Wed, 01/29/2014 - 10:13 | 4379425 BullyBearish
BullyBearish's picture

Erdogan's former "friends" and bankers are after him...

Wed, 01/29/2014 - 10:22 | 4379447 El Hosel
El Hosel's picture

STFB    Short the fuking bounce, TTCB    test those circuit breakers.

Wed, 01/29/2014 - 10:24 | 4379462 eurogold
eurogold's picture

Let's hope so !

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