How do investors assess risks?
One of the followers asked me to respond❤️
The answer, dear follower, is:
First: Sovereign risk indicators (such as CDS): measure the likelihood of a country defaulting on its debts.
Second: Capital flows: monitoring the outflow of foreign funds from the stock exchange.
Third: Market volatility: such as a rise in the VIX index (fear index) that reflects uncertainty.
In summary:
There is no "single indicator" for currency collapse, but there is a set of economic and financial factors that indicate currency weakness and its impact on the stock market.
Investors are advised to monitor the following:
- Central bank policies.
- The country's trade balance.
- Political and economic stability.
