After tackling emerging markets, Bloomberg Markets Magazine has ranked its favorite frontier investment spots for 2012.

Like its EM list, BMM rates frontier markets based on International Monetary Fund four-year economic forecasts, World Bank demographic data and Bloomberg market figures, but also takes into account each nation’s reliance on energy imports and exports.

The Middle East and Eastern Europe dominate the list — but neither makes it to number one.

15. Ukraine

Total score: 45.9

Of the 15 frontier markets on the list, Ukraine suffers the highest level of currency volatility, the toughest business conditions, plus a big inflation rate and an expensive stock market (on a price-to-earnings basis).

However, the Eastern European nation has one of the best economic growth profiles of the countries included, which is what lands it on the list.

Source: Bloomberg Markets

14. Kenya

Total score: 49.7

Kenya makes up for its average growth and inflation rates and currency volatility with its cheap stocks. While it’s significantly easier to business here compared to Ukraine, Kenya still gets slapped with the second-worst score.

Source: Bloomberg Markets

13. Croatia

Total score: 52.0

Croatia’s stock market is cheap and inflation is low, but so is growth (relatively). The currency is also highly volatile and the government is saddled with a lot of debt — more than any other nation on the list. 

Source: Bloomberg Markets

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Bloomberg Markets Magazine has released its ranking of the most promising emerging markets for investors in 2012, and it makes for interesting reading.

Under the model developed by Alex McIntyre of Bloomberg Rankings — which takes into account International Monetary Fund four-year economic forecasts, World Bank demographic data and Bloomberg market figures, among other measures — most of the BRIC nations have slumped near the bottom of the list of the top 15 emerging markets, if they make the cut at all.

Except for one, that is.

15. India

Total score: 42.3

Despite India’s stellar GDP growth, and its cosy position in the middle of the BRIC acronym (Brazil, Russia, India and China), it is let down by its massive inflation rate, relatively high government debt-to-GDP ratio, and the difficulty of business there.

However, Brazil fared worse. Its economy shrank in the third quarter for the first time in two years, dragging it out of Bloomberg’s top 15.

Source: Bloomberg Markets

14. Mexico

Total score: 44.0

While it’s relatively easy to do business in Mexico, where inflation is also fairly moderate, it has the lowest projected GDP growth among the emerging markets analyzed. Its stocks are around the mid-range when it comes to price-to-earnings rankings, and it sits in roughly the same place with government debt levels.

Source: Bloomberg Markets

13. South Africa

Total score: 44.7

Another GDP underperformer, South Africa also suffers from a high rate of inflation and currency volatility. However, it’s one of the easiest emerging markets to do business in.

Source: Bloomberg Markets

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As Greece flirts with default, the focus in the U.S. is shifting to the capital strength of domestic banks with plenty to lose.

DealBook’s Peter Eavis reports that five of the biggest U.S. banks, including JPMorgan Chase and Goldman Sachs, have more than $80 billion exposure to the riskiest European sovereigns — Greece, Ireland, Italy, Portugal and Spain. And the credit default swaps the banks bought to protect themselves against a credit event may never pay out.

But there’s more to worry about than Europe, based on a handy new note from Royal Bank of Canada that details the capital ratios of the 20 biggest US banks in the fourth quarter of 2011.

It shows a rise in the banks’ average Tier 1 capital ratio to 10.45 percent, from 10.29 percent in the third quarter, reflecting divestments and capital raising throughout the industry.

But under the incoming Basel III capital rules, which are set to drag down the average Tier 1 ratio to 9.00 percent, some of the largest lenders, which tend to lag regional firms, will need to do more to meet the new 8.5 percent requirement.

While non-performing assets and charge-offs generally declined in the fourth quarter, any turnaround could also force banks to raise more capital in stressed markets — and there are already plenty of jitters.

20. M&T Bank Corporation

19. Regions Financial Corporation

18. US Bancorp

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Arizona is home to the county with more empty houses than any other metropolitan area in America.

The state’s population boomed alongside property prices in the decade leading up to the sub-prime crash, but values turned just as fast—Arizona home prices have tumbled close to 60% since 2006. Individual properties were foreclosed on and left empty. Plots were turned to farmland as developers fled.

While home prices in the state have shown positive signs recently, posting a small rise late last year, it will take a lot more to bring back the builders that left entire planned communities to rot in the sun.

MARICOPA COUNTY: There are more empty houses here than in any other metropolitan area in America.

PHOENIX: Distressed homes have made up about 80% of sales in and around the city, where land prices have fallen from roughly $90 per square foot to $9.

This housing development on the outskirts of the city is all but vacant.

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