Japan and South Africa fall in sovereign risk index

Table mountainJapan and South Africa fell while China and Australia rose in the quarterly update of an index of sovereign credit risk produced by BlackRock.

Japan was penalised because of its deteriorating fiscal balance, and fell two spots to 35th in the ranking of 48 countries, below Turkey, Indonesia and Slovakia. South Africa also fell two places, to 36th, owing to a worsening current account deficit.

“Anecdotal evidence has money fleeing [South Africa] at a rapid pace,” notes a report by the BlackRock Investment Institute, a division of the asset manager that produces investment analysis.

Norway, whose government gains large revenues from exporting oil and gas, is top of the index, meaning it has the lowest sovereign credit risk. Singapore is second followed by Switzerland and Sweden.

The United States stayed in 15th place after the quarterly update, even as American politicians struggled to resolve the problem of the fiscal cliff.

“The last-minute deal was better than nothing, we think, but its limited scope means more tortured budget talks – and market volatility – ahead,” says the BlackRock report.

Australia jumped three places to seventh because of an improved budget balance, while China rose two places to 16th after a fairly smooth change of leadership that reassured BlackRock's analysts.

©2013 funds europe