Emerging Markets Under Pressure as Trade War Tensions Continue

You know there’s an underlying problem when investment firms start to cut exposure to a particular asset class.

Goldman Sachs’ decision last week to slash exposure to emerging markets is an indication of the current situation for these economies. The bank’s asset management arm said it had scaled back its “overweight” exposure to emerging market currencies and debt amid rising trade tensions between the U.S. and China.

Emerging markets are bearing the brunt of an escalating trade war between the world’s two largest economies and there is no certainty on when this ends. Last week was the worst for emerging market currencies since the Turkish lira crisis of summer 2018. The Chinese yuan has lost nearly 3% of its value against the U.S. dollar since May 5 — the day President Donald Trump tweeted about new tariffs on the country.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza