What are the biggest threats to global markets this year?
According to Eurasia Group's Top Risks for 2013, emerging markets pose the greatest investment risk this year.
“There’s a lot more downside risks in the emerging markets,” says David Gordon, head of research and director of global analysis for Eurasia Group. He tells The Daily Ticker that investors should not view emerging markets as one big money-making market but as a group of diverse economies that should be judged individually.
“For the first time in several years we’re looking at a lot more differentiation in the emerging markets," says Gordon.
Eurasia Group is bullish on Brazil, Colombia, Mexico, the Philippines, South Korea and Burma (Myanmar).
The outlook for the two biggest economies in Asia -- China and India -- are less certain. They will continue to grow but face political pressures, making it harder to invest there, says Gordon.
China’s leaders are tightening up on information domestically and promoting nationalism globally, according to Gordon.
“The Pacific region which…had always put commerce and economics above geopolitics is in real danger now," he says.
He believes Africa is a region that “will be a big story for investors over the next several years." Gordon is bullish on Mozambique and Ghana but bearish on the two biggest countries in Africa —Nigeria and South Africa. Both face political and economic pressures.
As for the U.S., the biggest risks are political rather than economic.
“The housing market is turning up, corporations are in great shape….but we’re in for a year of real political dysfunction," Gordon says. "Continued brinksmanship between the president and Republications in Congress will put downward pressure on growth."
What do you think is the biggest risk to global markets this year?
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