Wall Street leads chorus to get back into the emerging-market game

Bloomberg

This year won’t see a re-run of nightmare on EM street, according to a trio of top American banks, more than a few money managers and even a former central banker.
Goldman Sachs Group Inc. says fundamentals in emerging markets are mostly intact in the wake of the recent stress test from higher US interest rates, a rally in the dollar and jump in oil prices. Morgan Stanley concurs, highlighting that real interest rates are higher, inflation is lower and current-account balances better in most major emerging markets than in 2013, with some exceptions. Citigroup Inc. also sees them being better equipped to ride through bouts of volatility.
“We don’t have the significant external imbalance in EM that we used to,” Johanna Chua, Hong Kong-based chief economist for Asia Pacific at Citigroup, told Bloomberg Television’s Yvonne Man and Ramy Inocencio.
“The shocks have not really been as bad as they were, for example during the taper tantrum.
Markets have been differentiating across asset classes.”
The Wall Street banks aren’t alone in their optimism. Franklin Templeton Investments is taking advantage of recent volatility to buy in emerging markets including the Middle East and Islamic-bond issuers in Asia and Africa.
Despite stress in Argentina, developing nations are in a stronger position than before and Asian countries are among the healthiest, said Raghuram Rajan, former governor of the
Reserve Bank of India.
“Some of them can get stressed,” he said in an interview with Bloomberg Television.
“At this point I would say, amongst the big ones, no clear and present danger.”