BlackRock's Devlin warns on European country risk rise

BlackRock's Vincent Devlin said country risk is a serious threat for European equity investors as markets decouple in reaction to the eurozone crisis.

The manager of the European Absolute Alpha fund said two years ago, country risk accounted for 2% of all market risk. This has now increased to 8% and has been as high as 10% in recent months. He illustrated the point by showing the divergence in performance between the Dax and the Ibex. He said: “It is very rare you see a huge differential like that.” Devlin has in the past used contracts based on the Eurostoxx 50 for short positions in the region. However, he said he may now consider single country indices rather than European ones because they are diverging so significantly. He ...