An exchange traded fund (ETF) tracking emerging markets is set to rally 14% as central banks wind down the pace of monetary tightening, Goldman Sachs says.
Easing food inflation and economic growth in China should also power emerging markets, Goldman analysts said, according to a Bloomberg report.
Emerging markets stocks have “underperformed developed market equities very sharply,” Goldman noted, but that trend may reverse.
The analysts put a price target of $55 a share on iShares MSCI Emerging Markets Index Fund (NYSEArca: EEM), roughly 14% higher than the ETF’s closing price Wednesday.
Similar funds such as Vanguard MSCI Emerging Markets ETF (NYSEArca: VWO) have traded in a range since late 2010 but are threatening to break out to the upside. The Vanguard ETF was up 4.7% for the month ended March 30, according to Morningstar.
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