Goldman Sachs EM WEEKLY KICKSTART: MSCI EM Rises 4% to Fresh Highs on Iran Deal Optimism; Tech-Heavy North Asia Leads; Hungary Raised to Overweight; Colombia Elections This Weekend
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MSCI Emerging Markets (EM) indices surged 4% this week, reaching fresh all-time highs, driven primarily by growing optimism surrounding a potential Iran nuclear deal. The rally reflects a broad improvement in risk sentiment as geopolitical tensions ease. Concurrently, North Asia markets—characterized by heavy technology exposure, particularly in Taiwan and South Korea—continued to outperform, fueled by robust demand for artificial intelligence (AI) hardware and semiconductors.
In terms of equity positioning, Goldman Sachs upgraded Hungary from Neutral to Overweight. The upgrade is justified by attractive valuations and an improving economic growth outlook, despite lingering concerns about interest rates. On the currency front, the Brazilian Real strengthened on commodity price gains and fiscal reform expectations, while the Turkish Lira faced renewed depreciation pressure as the central bank maintained a loose monetary stance.
Political developments also loom large this week, with the first round of Colombia's presidential elections scheduled to take place over the weekend. Results could introduce short-term volatility, though markets will closely monitor the subsequent runoff dynamics.
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