Goldman, Citi Hunker Down as Trade War Hits Emerging Markets
- Outflows from U.S. EM ETFs climbed to one-year high last week
- Risk-off environment taking hold in emerging markets: Goldman
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Some of the world’s largest money managers soured on emerging markets as compounding trade threats deepened the worst monthly rout for developing currencies since the U.S. election.
Goldman Sachs Group Inc. said it’s reducing an overweight position in developing-nation currencies, preferring a more “defensive” stance as China and Europe warned the escalating trade war could trigger a global recession. Citigroup Inc. cautioned that investment flows into emerging-market assets will subside, while Morgan Stanley lowered its recommendation toward the asset class, citing the risk of a stronger U.S. dollar and ballooning trade threats.