Mobius and Goldman Sachs Predict China’s Economic Boost to Propel Emerging-Market Equities

Mobius steps into Goldman Sachs' wager on China enhancing emerging-market stocks.

'The influx of capital into emerging markets will increase,' says the experienced investor. 'You're going to witness a significant shift in this entire market.'

'The total inflow of funds into emerging markets will grow,' the seasoned investor predicts. 'You're going to observe comprehensive market movement.'

Equities in developing markets are set to benefit from stimulus efforts in China, due to the country's significant influence on indices and its strong economic relationship with other emerging nations, say seasoned investor Mark Mobius and strategists from Goldman Sachs.

China makes up 25% of the standard MSCI EM stock index, indicating that a surge in China's markets would cause a rise in the index as well. Actions like stimulus measures and a reduction in the Federal Reserve's interest rate led to a 10% increase in emerging-market stocks from their lowest point in mid-September.

The relaxation in China has expanded the surge in emerging-market stocks, a movement which has been fueled by significant increases in influential Chinese equities, according to Goldman strategists, including Kamakshya Trivedi. These have grown almost 40% from their lowest point, with China's superior performance against other emerging markets over the past three weeks being the most distinct it's been in the last quarter of a century.

They expressed anticipation for continuous growth in emerging-market stocks, with ripple effects from China's economic expansion impacting various countries including South Korea, Malaysia, and South Africa.

Goldman Sachs has upgraded China from market weight to overweight in its Asian strategies.

According to Bank of America, citing data from EPFR Global, stocks funds from emerging markets experienced their highest weekly influx, reaching $41 billion, up until October 9. Chinese equities broke records with a weekly inflow of $39.1 billion.