Country Risk: The 2024 Update

If there is a lesson that I learned from the 2008 market crisis, it is that market crises almost always play out as big changes in the price of risk. In keeping with that lesson, I have been updating my implied equity risk premiums for the S&P 500 every month, and my country risk premiums twice a year. I have also created two annual updates, one on equity risk premiums that I publish in March of each year and the other on country risk that I publish in July each year. This session provides an abridged version of the my 2024 country risk premium update, starting with the drivers of country risk, moving on to measures (sovereign ratings, country risk scores, equity risk premiums) and closing with an explanation of how country risk plays out in business and investing decisions.
Slides: pages.stern.ny...
Paper: papers.ssrn.co...
Blog Post:
Data:
1. Equity Risk Premiums, by country, in July 2024: pages.stern.ny...
2. Currency riskfree rates in July 2024: pages.stern.ny...

[@jojackborseman]

It's unbelievable that a top tier master of the subject is giving away all this knowledge for free (not just this video I mean. Everything on this channel). You just have to grab it and learn it. Dr damodaran, you are most definitely one of the rare gems of this generation distributing knowledge that will help even the coming generations. I dont know if you will ever read this comment but I have learnt a lot from you. Thankyou so much sir!

[@mchandwani73]

Simply Amazing!! Thank you for sharing!

[@georgethomas3597]

00:03 Post-2008, attention to the price of risk in mature equity markets has increased. 02:12 Differences in country risk across countries 06:40 Challenges of operating a business in violent environments 08:51 Corruption and property rights impact country risk. 13:17 Climate change impacts country risk through commodity dependence 15:26 Country risk is influenced by commodity dependence, life cycle stage, and climate change exposure. 19:35 Market-based alternative to sovereign ratings 21:26 PRS score measures country risk level. 25:14 Equity risk premiums are determined by ratings and PRS scores 27:01 Factors influencing hurdle rate calculation 30:43 Country risk affects enterprise value and EV/D ratio 32:35 Valuation of companies in different currencies affects discount rates and growth rates 36:15 Currency and company valuation should be kept separate for accurate assessment. Crafted by Merlin AI.

[@surajitdas7695]

Many thanks, George !

[@sanjayshiva]

W to Merlin AI

[@polobik4231]

Mr. Damodaran you truly are one of the great minds of this era

[@kumarapillay3122]

eagerly waiting for your halfway update on US stock market professor. Your valuation was spot on for this year!

[@cocoarecords]

Same

[@isabel1188]

@kumarapillay3122 where can we see what Professor Damodaran's valuation of the US stock market is? Thanks!

[@kumarapillay3122]

@@isabel1188 check the data update 2 video he uploaded 6 months back and also all the data update video for this year, they are extremely detailed. In addition, you can check type in aswath damodaran blog in google and in that he uploads all his valuation and the excel sheet he uses

[@Stolt0r]

I think this is the first time I really understood everything 😅 thank you so much for your videos ❤

[@sucim]

What is outstanding about Aswath Damodaran is that he is a master of the theory but gives concrete examples to even the last little detail. Most academics and people in general gloss over the hard parts with words like "what not" and "whatever" (like mathematicians calling things "trivial") to give the impression that they are superior and evade thinking about the hard aspects at the same time

[@nournour953]

This channel is gold 🥇🪙

[@vasilzhiliev6057]

Pure gold. Thank you Professor.

[@jerryfrancis7406]

Amazing! Thanks for your time and efforts. Valuable content.

[@Kep19901]

This is a smart guy 👌

[@therealcharlystaqueria]

Thank you

[@HOPCOUNT]

Just watched your Bloomberg segment with Alix sent me here.

[@jackbailey7037]

As soon as he says he trusts The Economist for scoring political freedom, I tuned out.

[@ragingpahadi]

Enlighten us please

[@shaonghosh1]

In the map of property rights I saw China in yellow. I did not realize that citizens in China had rights to property. I used to think that the government controls all the land, and the citizens are practically "leasing" it. If my property is built on the land owned by someone else, does it really give me full right to the property. Sure, I can sell the property and get the money back, but physical property is not really like stocks which is much more liquid. Shouldn't China be gray in this map? Of course, I understand that Aswath did not make this map, it's just a curious question about what was the metric behind making this map.

[@ceceking100]

The GOAT. ♥

[@jimd1617]

thank you 🤝

[@FranklinPiens]

No corruption in the US. We call it 'Lobbying'.

[@Bigagoo]

It’s kind of like a morality risk premium.

[@ilkhamnabiev1084]

Amazing

[@johnhammer8668]

Hi, Is your books before 2002 are still useful. Should i read it. Thanks

[@PranithShetty-l3c]

That shirt is very distracting 🥲

[@12a3b]

Lage raho

[@ANShared]

Professor, great insights - would appreciate if you could use the correct map of India.

[@harshvardhan2180]

Like he said, if you have any qualms with any data, take it up with the org not him. I suggest you mail the org to include J&K if you care.

[@SSPParthas]

Can liquidity postpone the risk? How will impact the too much of liquidity ?

[@duck3072]

Do a video on ola ipo share valuation

[@ashutoshshahi9321]

Mr. Damodaran, Pls use the correct map of India

[@user-ur5yg3cx8t]

why everything dies ?

[@samsungtabs8121]

Thanks 😊 guruji 😊

[@KiranKumar-ns8lc]

Hi sir good evening

[@arangotan]

If one has an ADR in USD would you use the US risk premium or the risk premium of the home country? Anyone know?

[@harshvardhan2180]

Depends on the markets the company operates in. If it's pure US play, then US risk premium. Try to understand the octopus part of the video to understand MNCs in US.

[@Anshuman280]

Kindly use the correct map of India

[@tempioxavo]

Hey prof, what about Lehman swaps due on september 😂 It's all a joke none of this matters, it's only purely reflexivity...

[@TobiasBlithe-r2h]

Davis Charles Moore Angela Garcia Carol

[@friendeleven5711]

Model is erroneous. If US has less country risk than China it is impossible

[@dbsk06]

19:31

[@ViorelLavrentiev]

Violence in Russia most violent country in the world, ahaha. I am russian, can go anytime everywhere in the country. I and my friends and colleagues never heard shots in the street, have never been attacked, never someone asked me to buy drugs. I can imagine other countries that have bigger problems than us

[@harshofcourse]

I think it's violence at an international level, including war and all.

[@JunaidHasan23]

On Page 13 of the paper attached in the video description, it mentions it is talking about internal + external violence. Businesses are exposed to external violence as well, it is kind of like an american company may be more vulnerable to business shutdown of its business in Russia in case of international conflict with Russia and vice versa. It does not only talk about the internal violence.

[@alldo-nc2fd]

Exactly. Why would a slave consider a punch in the face from a master as violence?

[@AKumar-co7oe]

you do realize you are at war and sanctioned by half the world right? and 300B foreign currency reserves seized

[@JohnUsp]

India is a big mess, good luck in investing there.

[@decconan4230]

How so?

[@NEPALI-NINJA]

india is a country where only fools are going to invest. They are just selling Stories and will lose money in long term. Most of the companies there have huge huge gap in Earnings and Valuations Since 2020, there is a cult started in india for Equity SIPs bringing Crazy Liquidity pushing Nifty200 and most stocks at 52 week high every other day.

[@ashleigh3021]

@@decconan4230Common sense?

[@rohanch07]

Please take a look at long term charts of major indices Sensex 30 or Nifty 50 before taking this Chinese bots' advice. Winnie Da Poopoo, you are nobody to talk about India while nationalizing Alibaba and rigging the economy numbers. Go back to calculating social rating for your citizens. Shoo.

[@12a3b]

itna dimag lagane ka kya fayeda?

[@NotMe-vv4bu]

You are an amazing teacher! Thank you so much for educating me; I'll absorb it like a sponge. 🧽