Brexit creates a ‘rates over growth’ environment for EM – Goldman Sachs

Research Team at Goldman Sachs, suggests that with global markets focused on Europe currently, EM may appear relatively better positioned to weather a drawdown.

Key Quotes

“However, EM equities have underperformed in almost every DM correction since 2010, and we expect EM to remain high-beta. While still highly fluid, Brexit likely represents a shock to global growth and a driver of further central bank accommodation – a reason to take duration risk relative to ‘growthy’ assets. As a reasonable comparison, during the 2011-12 Euro crisis, EM sovereign credit yielded a 19% total return while equity lost 15% (in USD).”