Goldman: Beware EMs, China Will Drag Them Until 2020

China’s enormous, complex economic transition will keep emerging markets under pressure for the next five years, Goldman Sachs has warned.

In report setting out its forecasts on China, the bank told clients to “adjust their exposures” to EM assets.

“The country is trying to shift its economy away from an export-driven and investment-led one to a more balanced, consumption-oriented economy,” Goldman said in the report, headlined “Walled In: China’s Great Dilemma.”

“A complex and interconnected reform agenda has never been achieved on this scale. The transition, if accomplished, is unlikely to be smooth.”

That means China will spur market volatility not just this year, but for the next five years, with emerging markets likely to bear the brunt of the hit, Goldman said.

CNBC

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Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.