The MSCI emerging market index fell 2%, with South Korea leading the decline and China rising against the trend. 2Q earnings are expected to grow 70% (Goldman Sachs)
Goldman Sachs Emerging Markets Weekly Report pointed out that the MSCI Emerging Markets Index fell 2% last week, mainly affected by renewed tensions in the Middle East and a three-week reversal in momentum stocks.
Goldman Sachs Emerging Markets Weekly Report pointed out that the MSCI Emerging Markets Index fell 2% last week, mainly affected by renewed tensions in the Middle East and a three-week reversal in momentum stocks. However, there were significant differences within the market: South Korea's stock market fell 8%, while China's stock market bucked the trend and rose 3%. This shows that the independence of the Chinese market is increasing, or it may benefit from domestic policy expectations and valuation depression effects. Goldman Sachs also pointed out that 2Q profits in emerging markets are expected to surge by about 70% year-on-year, mainly driven by the technology industry. This constitutes the most fundamental support for the market, and investors should take advantage of market adjustments for layout. One-sentence conclusion: emerging markets are severely divided, Chinese assets are becoming a safe haven for funds, and strong profit growth driven by technology is the most solid reason for global investment in emerging markets. Positive/negative: Structurally positive for China and Taiwan markets (benefiting from technology cycles). Short-term negative for South Korea (sensitive to geopolitics and semiconductor cycle). The Chinese market may not yet fully reflect its independent market conditions and earnings growth potential. Catalysts: 1) China’s June economic data (social finance, GDP, etc.); 2) US inflation data and its impact on global risk appetite; 3) 2Q financial reports of core companies in emerging markets.