Many emerging markets assets have not been able to ride on China’s reopening coat-tails this year as it has been too domestic, according to Goldman Sachs Group Inc.’s Caesar Maasry.
(Bloomberg) — Many emerging markets assets have not been able to ride on China’s reopening coat-tails this year as it has been too domestic, according to Goldman Sachs Group Inc.’s Caesar Maasry.
The reopening is “less about credit growth, it’s less about infrastructure spend that usually spills into commodities and other EMs,” the firm’s head of emerging-market cross-asset research said in a Bloomberg TV interview.
Some emerging markets need to reform and think about having growth drivers that are not just reliant on the commodities angle, he added.
Some key takeaways from Maasry:
- When you look at growth consensus estimates, GDP for this year, they have gone up for China, they have gone up for the US, they have gone up for Europe, but they are basically flat to down for most of EMs
- Other EMs probably need to reform and think about picking their own growth drivers that are not just reliant on the commodity angle
- In general, we are not talking about a great risk environment. The best opportunities are going to be in relative value. What we have highlight recently in the EM space, is within Latin America, and specifically Brazil versus Mexico. That is quite tactical
This week’s Emerging Markets Week Ahead column did a deep dive into the laggards, including Argentina, Tunisia and Egypt, that have weighed on the performance of an otherwise resilient group.
“The countries that are under stress are clearly demonstrating a larger concern” for investors, said Joe Delvaux, a money manager in London at Amundi SA. “Some of the concerns can be predominantly focused on their debt sustainability, while others again also face political issues.”
Click here to read more: Riskiest Country Debt Left Out of Emerging-Market Renaissance
(Updates with details on Goldman’s call China, Latin America starting in fourth paragraph)
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