Daily Management Review

Goldman bets on emerging-market stocks


03/15/2018


Goldman Sachs Asset Management considers shares of developing countries the best option for investment after the February fall in the value of assets, writes Bloomberg.



Eva K.
Eva K.
Unlike previous cases of market correction, when developing countries watched a large outflow of capital, customers invested more money in the riskiest assets this time, said International GSAM CEO Sheila Patel. This was a sensible strategy last month, when the return on investment in EM shares was 3.1% compared to 2.5% for US stocks.

The division of Goldman Sachs Group Inc., which manages assets of more than $ 1 trillion, chimed with GMO, Voya Investment Management and JPMorgan Chase & Co. They also note the benefits of developing markets for their customers after the main stock index rose by more than 75% since early 2016. Bulls argue that support for EM shares is provided by the growth of companies' profits, historically low valuations of assets and lower volatility compared with the shares of developed countries.

According to Patel, GSAM is particularly positive about the shares of Indian companies in the health sector, the Mexican consumer sector shares, as well as the Argentine debt. She expects the Indian government to increase health care spending under Prime Minister Narendra Modi. And although political risks cannot be ignored, investors' pessimism towards Mexico and Argentina is exaggerated, she noted.

GSAM also looks closely at the markets of Saudi Arabia. "I think that Saudi Arabia is certainly another place that, given the likely inclusion in MSCI and, again, a very favorable demographic situation, attracts a lot of attention of our customers who want to understand what opportunities can exist for this market" - said Patel.

Even four increases in the rate of the US Federal Reserve are unlikely to weaken investors' appetite for risk. The growth of shares in emerging markets followed 19 of the last 22 increases in the Fed’s rate. In all cases, except for seven, rally EM shares occurred within a week after the increase.

Everything boils down to fundamental economic indicators. The degree to which developing economies outperform developed in terms of growth rates is increasing. This and the high valuation of the companies' profits should support the assets of EM, regardless of how the rate of the Federal Reserve changes, says Francois Savary, investment director of Prime Partners SA in Geneva.

source: bloomberg.com






Science & Technology

What trends will be affecting the health sector in the coming years?

Deloitte identifies main cyber threats for power industry

Zenuity To Take Self Driving Car Road Test In Sweden With Permission

Researchers: Half of Facebook users is fake

Amazon’s Ring gets in a privacy scandal

Facebook Is Creating A Stablecoin For Its WhatsApp Users

IBM offers to use the first quantum computer

Passport Numbers Of 5 Million Customers Hacked: Concedes Marriott

China Lifts Approval Freeze On New Video Games Launch

Concentrated Solar Plant System To Dispatch Electricity To The Grid On Demand

World Politics

World & Politics

AirHelp expects up to 33 th of cancellations and flight delays per day all over the world in 2019

Far-right and Catalonia: New elections in Spain

Trump is losing rating because of shutdown

Hanoi, Vietnam Chosen As Place For 2nd Summit Between Trump And Kim Jong-Un

US, China to hold new negotiations in Beijing

Human Rights Not To Be Dissociated From Stability, Macron Tells Sisi

Brexit Hijack Is Not The Parliament’s Right

Macedonia ignites political crisis in Greece