Emerging-market risk

Political, legal, liquidity and currency exposures associated with an investment in an emerging market. Their importance varies by country, asset and structure; currency risk also exists in developed markets.

Emerging-market risk in practice

Hypothetical: a manufacturer reports a strong local-currency profit while its currency weakens against an investor’s reporting currency. That can reduce translated value or investment returns, but the outcome depends on invested capital, cash-flow timing, exchange rates and hedges. Local accounting profit is not the investor’s return.

Hedging & FX risk · Special situations · CFIUS · FCPA & anti-corruption · All of the glossary