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

Apple takes up to develop Apple Watch for health monitoring

Hyperloop is growing in Europe

Analysts: US gamers prefer mobile games

Google Assistant Winner Of Head-To-Head Test Of Digital Assistants, Beats Siri And Alexa

Animals Can Burn Muscle To Supplement Body Water Needs, Finds A Study

The future of private flights at Farnborough air show

Experts Want To Fix Problem Of AI Hurting People Of Color And The Poor

New Study Claims Astrobiologists Locating Possible Life On Moon In Its Life Time

Wreck Of Russian Ship Rumoured To Have 5,500 Boxes Of Gold Found Near South Korean Island

Gene Editing of Human Embryo Could Find ‘Moral’ Grounds: UK’s Ethics Council

World Politics

World & Politics

Venezuela comes up with a new monetary reform

Paris is losing its icon public bicycle sharing system

Heat wave in Europe creates problems for brewers

Is it legal to print a gun? US is discussing 3D printing of firearms

Southeast Asian Leaders To Seek Clarity Of US Policies For The Region Form Pompeo

The world economy is accumulating environmental debt

US To Invest $113 Million In Asia To Counter Chinese Influence

US Intelligence Detects New Activity At Its Missile ICBM Factory: Reports