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Markets Update: Emerging Markets in 2021

2021-01-15

Jennifer Roth of Goldman Sachs' Global Markets Division gives a quick update on why investors have been turning to emerging markets amid the global backdrop of low interest rates.

This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
Welcome to our exchanges at Goldman Sachs market Update for Friday January 15th. Each week we check with the leader cross the firm to get a quick take on what they're, watching in markets on Jake Silver global head of corporate communications here at the firm, and I am delighted to be joined by general, what about global markets? Division was gonna talk about ass. She always does the investing landscape for emerging markets. Jen welcome back to the programme happy new year. Thank you. Jake Happy New Year good to see you hopefully, next time we do it'll be in person at least once in person. Hopefully somebody had it. So for those watching emerging markets. The embassy I index, as rally back to record highs. What's driving all the enthusiasm amongst investors? so you're, absolutely right. In the past few months, you're really has been a significant amount of enthusiasm. Around emerging markets is ass, a class we ve now had four.
for ten months. Very easy monetary policy conditions globally that I've really flushed a market with liquidity. On top of my tyrian host, you also the fiscal impulse that is perceived to be even stronger with democratic Wednesday, Georgia last week she never mind angry of a fiscal anchor in the Black Sea, which doesn't ass, Jolly help us on a spot basis, but very positive for the forward. You also the world forecasting stronger global growth of five point, two percent, which is a particular well about consensus. At six point, four percent M is affected we have been a play on growth in the quintessential reflation and pro cyclical trades. We should continue to benefit from the macro environment for finding ourselves. I'd be remiss not to mention violations which also play an important role here was tradesmen. Discounted development equity is, for obvious reasons, but as a cheap, as it has been on a relative basis, which makes up particularly attractive dying, Look somewhere in the external debt side were combined, looked attractive forces you as high yield bond, which continue to drive employers interests into the space suggested The fundamentals of the emerging market economies really match the
The prices were seeing, or is there a bit of a disconnect to write on the markets. Really training on a forward basis to pray section is largely ignoring the somewhat challenging him fundamentals like a large fiscal deficits and little room on the monetary policy side because of the extremely supportive macro backed up with the asset classes. We just the Scots if we Forward and will most likely comes when inflection during the next six to nine months, fundamentals wider of improved significantly. If we had the sustained growth, we are forecasting birthday, materialise. Many of the countries will be in a difficult situation. though I no more room on the fiscal or monetary policy side and want to deal with a high debt level, which could become an issue for the credit, praying approach, you run out of fundamentals, which is what we are seeing now with the positive praise action abortionist around the ass a class so emerging markets, stocks very broad category within emerging markets, other particular areas where you're seeing a lot of investor interest channel
speaking investor interest, has been the hind shoulders. People are really looking to generate carry so places like Mexico, Indonesia, Russia, South Africa or in the words like Brazil and the EU. Space. Given the rally we saw last year, more interest has been the steep and our trades in credit. Our investors are really waiting for what the anticipating a robust new issue pipelines, but their money to work you're talking a lot of clients, you the sense from trucker them that this kind of more aggressive investing style will continue throughout the year went about trying to start the year. People really aren't binding from therefore positive view on the ass a class mostly failure managers relating twenty twenty one will be the year for yeah, yeah ones, Treasury sell us stabilizes they're, ready to reload Longs with continued preference behind yelled, override g. as to whether this is really a consensus play Bobby this point, which can be a little bit worrying when everyone has the same view,
What are the risks that could shift people away from me and assets which asset classes most vulnerable? The most obvious risk right now is www. Renewed covenant do shut down or network local breath you beyond that. If everything goes well and you can have a lot of central banks that we take interest rates later in the year which will put pressure on these are caught his we Thank you, but I am commodities in the dollar. Thirty change in the Bush commodity narrative, the dollar bit of the past few weeks, remains at world level but the ass a class under pressure. The clear neither of these are based pieces, but regardless of the risk to keep an eye on origin. Well, thanks for joining us out, quick overview of where we are today will check back later in the year and see how emerging markets are holding up sounds great things for the time. Jake That concludes this episode of exchanges. Goldman Sachs. Thank you very much for listening and if you enjoyed the show, we hope you subscribe and Apple pie, castle, liberating or a comment, and in case you missed. It check our other episode this week with Olympia, Mcnerney of our investment banking division on the content,
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Transcript generated on 2021-07-01.