COUNTRY RISK ON GLOBAL STOCK MARKET

The stock market in each country has its own specific features compared to the global equity market. These differences reflect the different risks for investors who invest within one of the national stock market. Higher risk in the stock market is reflected in the summary of aggregate - increase price volatility, as well as the low liquidity of the market. Currently, we can find several research studies which examine the mutual and empirical relationship between country ratings and the components of stock market volatility. This relationship is examined in respect of individual countries, as well as in relation to global equity markets, as also from the perspective of both the short term and the long term. The purpose of this paper will be to examine the sensitivity of stock market volatility in select countries, in relation to their credit, economic or financial risks. These indicators and their relation to the stock market should be considered by every investor who decides to invest in the country. Country stability as an aspect of political risk is also significant, and currently plays an important role in the allocation of investible capital among various countries. In attempting quantification of the risk in stock markets, we have focused mainly on the political impact of Brexit to the UK stock market, where the stock market is a major player in the long run.