It’s a risky world out there

Weird things are happening to the price of risk

As part of my process, I update my country and equity risk premiums across the world twice a year. In the following geo-chart, I have colour coded the equity risk premium for each of the 156 countries I analyse. These premiums range from 4.77% at the safest end to 22.01% at the riskiest end.

Equity Risk Premiums Across the World for January 2022. (Interactive chart)

At the Aaa/AAA rated end of things, we have countries such as Australia, Canada, Denmark, Germany, Liechtenstein, Luxembourg, The Netherlands, New Zealand, Norway, Singapore, Sweden, Switzerland, and The United States. Whereas at the other end, we have countries with ratings of Caa2/CCC and below, such as Ethiopia, Sri Lanka, Congo, Laos, Mozambique, Belize, Ecuador, Suriname, Cuba, Argentina, Zambia, Lebanon, and Venezuela.

There were rating downgrades in 22 countries, with the most significant (>2 grades) downgrades being for Ras Al Khaimah, Guernsey, Jersey, Curacao, Ethiopia, St. Maarten, Tunisia, and Cuba. While, on the …