Measuring Country Risk on Bloomberg

In a previous blog (Evaluating Country Risk) we examined Bloomberg’s module for country debt ratings (CSDR).

Here are some additional Bloomberg modules dealing with country risk.

Country Risk Assessment is a Bloomberg EXCEL Template that calculates country risk for 60 countries based on 25 financial, economic and political risk factors. You can use Bloomberg default risk settings or calculate country risks based on weights that you choose. To access type:

XLTP XCRA <GO>

From the menu screen, click on OPEN to transfer the template to EXCEL. Then click on ENABLE CONTENT to activate the spreadsheet.

Here is part of the country view for Canada. Risk scores range from 0-100. The higher the score, the less risk a country poses.

Bloomberg Risk Canada

There are several additional views of the data available.

Model Summary: Gives a rank listing of countries by overall score, and subranking by Financial, Economic, and Political risk.

Bloomberg country score

Ticket List: A list of the approximately 1,500 Bloomberg mnemonics which form the basis of the country risk scores. Here you will find, for example, specific codes for France’s GDP forecast, Japan’s unemployment percent, and an index of the ease of doing business in Bulgaria. You can use the codes to examine the specific pieces of data. For example, to find the Economist’s Big Mac Index for Argentina from 1998 to date, type:

BIGMAR <INDEX> HP <GO>

Model Settings: This section allows you to change the default weights of the individual factors that determine the risk score. This allows you to “build your own” country risk scores.

Economist Intelligence Country Risk averages the individual measures of sovereign risk, currency risk and banking sector risk to compute a score ranging from 0 to 100. The lower the score the less the country risk. To see a list of countries  (approximately 120) and their overall risk scores type:

ALLX <GO>

allx country

Individual sub scores for currency (ALLX EICU), banking (ALLX EIBA), and sovereign risk (ALLX EISO) can be accessed as well.

Country Risk Premium: Bloomberg calculates the country risk premium as the return on a country’s stock market minus the risk free rate (typically government bonds) for the country. A recent figure for the United States is 7.09% where the risk free rate is 2.78% (ten year U.S. bonds) and the market rate is 9.88% (return on the S&P 500).  For access type CRP<GO>. Here are the first few entries (for about 40 countries) ranked by country risk premium in descending order.

Country Premium

For additional resources take a look at our Business FAQ, “Where do I find info on country risk — political risk, sovereign debt ratings, etc.?”.

Evaluating Country Risk: Global Economic Growth and Forecasts

International investing often begins with evaluating the country risk. This process involves looking at the risks associated with the economic, political, and business environments in a specific country. Analyzing these risks can help mitigate unexpected investment losses. Investors doing this are looking for information like:

  • The economic growth for the last ten years.
  • Forecast of economic growth for the next five to ten years.
  • Country debt rating changes for the last 10 years.

There are a number of databases that provide data for this type of research.

BMI Research provides forecasts of economic growth and inflation, as well as historical data. Start by selecting a country of interest. The quarterly Country Forecast Report covers political risk, macroeconomic performance (outlook and forecast), the business operating environment, and more. Within the database, you can also download historical data (GDP, exchange rates, balance of payments, inflation, debt, etc.) by choosing Compare & Export Data under Data & Forecasts on the right-hand side of the screen.

CEIC and Global Financial Data both cover a wide range of international economic indicators. CEIC provides data for Brazil, China, India, Russia, and other countries on a macroeconomic scale. The data comes from the national statistical sources. To find country specific data in Global Financial Data, select GFDatabase, then select the country of interest from the country list to view the datasets available.

BMI Political Risk Rating

You can find macroeconomic reports and forecasts in EMIS for emerging market economies. This database aggregates reports from a variety of sources like Oxford Analytica. To get to the macroeconomic reports, click on the Macroeconomics tab and select Analysis/Research: Economic. Continue reading

Go with the Flow: Bloomberg’s Trade Flow Function

China deficit_reducedBloomberg’s Trade Flow function (ECTR) has recently been updated. It provides an easy way to produce tables and graphs for world trade including data on total trade, surplus/deficit, exports/imports and net exports. Time series go back to 1980 and include yearly, quarterly, and monthly data. Geographic detail includes geographic regions, 251 countries, and geopolitical regions such as BRICS and the EU.

Bloomberg uses import data provided by the IMF. Bloomberg then determines the figures for exports by imputing them from imports. For example, country A’s exports to Country B are given as Country B’s imports from country A.  This calculation is done to make world total imports and exports equal. Reported export figures of countries tend to be lower, and are assumed to be less accurate, than import figures. For example, the IMF reports Total World exports in 2012 as 18,097.2 billion U.S. dollars and Total World imports as 18.267.0 billion dollars. The World seems to have misplaced about 170 billion dollars.

The graphic of China’s trade deficit in 2012 (shown below) displays its trade with the top 20 country trading partners ranked by the size of the deficit. The lines linking country names are color coded indicating the relative size of the deficit. Mousing over the lines will indicate imports and exports between China and its partners. Mousing over the country’s names will show their total imports and exports in world trade.

China deficit

The following Excel table shows the first few entries for China’s trade with individual trading partners, including individual countries, geographical, and political groups. The entire table has 200 entries.

Trade flow excel

Bloomberg’s Trade Flow Function is certainly easy to use. Its main limitation is the lack of product detail.  For trade between countries with product detail, use the UN COMTRADE Database.

For US trade with product detail, use Country & Product Trade Data (U.S. Census Bureau).

See also our guide to exporting and importing.

SNL – The Database, not the TV Show

SNL Interactive is a database of U.S. company and industry information.

The Penn Libraries subscribe to three SNL modules: Banking, Insurance, and Communication & Media.  For Penn users, SNL is available only on-campus. The initial use of the system requires you to create an individual account with your Penn email address. When you first use SNL, click on “SNL Preferences” to select the modules you want to access.

Blog SNL preferences

To give you a sense of SNL content, here are three examples of questions for which SNL has data.

Banking

Q: Rank Philadelphia area banks by their Market Share

SNL market share analysis for US banks is unsurpassed. Breakdowns are available by company and for specific U.S. markets including state, Federal Reserve Districts, MSA, county, city, zip and census tract. Below is a ranking of banks in the Philadelphia MSA by market share. To do this, go to the Bank Analytics drop-down menu at the top of the page and select Market Share.

SNL2

SNL is not the only place for banking data. Take a look at our Business FAQ on banks and banking for more sources.

Insurance

Q: Ranking of Annuity Writers

The SNL insurance module has market share data for companies in the Life, Health, and Property & Casualty sub-groups with detailed geographic breakdowns. In addition, it includes aggregate financial statements and premiums written by state and by type. To find a ranking of annuity writers, simply search the words “ranking annuity writers” to bring up dozens of relevant documents. Continue reading