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There are some countries that have less market freedom than others (see Index of economic freedom by countries.

Let's take into account only developed countries (USA, EU, UK, Australia etc.).

Do these regulations (aka absence of market freedom) add more risk to the investor?

For instance, EU (in general) has less market freedom than the USA. Would you say that, in general, european investors take more risks than the USA ones? (assuming that an european investor invests in the whole EU market, not in the USA one, that would incorporate currency risk).

If the answer to the above question is 'yes', what is worse, the risk related to the market freedom or the currency risk?

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Do these regulations (aka absence of market freedom) add more risk to the investor?

Yes. For example, a completely stupid "windfall profits tax" has been suggested here long time ago for old hydropower and old nuclear power. The risk is very real, in this case for investors investing to old hydropower and old nuclear power.

assuming that an european investor invests in the whole EU market, not in the USA one, that would incorporate currency risk

Disagreed.

An European investor investing to the USA does not take currency risk.

See my answer to this question; there is little to no currency risk.

If the answer to the above question is 'yes', what is worse, the risk related to the market freedom or the currency risk?

The risk of regulation is of course much greater than the currency risk, as the currency risk is extremely minimal in well-diversified stock portfolios.

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  • When you say 'the currency risk is extremely minimal in well-diversified stock portfolios', do you consider that 'well-diversified' involves to hold, say, 20% of your portfolio in international investments? – Martel Apr 7 at 17:09
  • @Martel Yes, see the answer to the linked question. Currency fluctuations have opposing forces when considering stock investments. – juhist Apr 7 at 17:13

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