25th September 2015
by G. Davies (ed.) M. Obstfeld, A. Taylor and D.Wilson
A debate on Emerging Markets, with Gavyn Davies, Maurice Obstfeld, Alan Taylor and Dominic Wilson
The attached Research Paper is a debate on the economic condition of the emerging markets prepared by Gavyn Davies, Chairman of Fulcrum, for the Financial Times website. The participants are three distinguished economists who have recently published leading edge research on this subject: Maurice Obstfeld (University of California, Berkeley), Alan M. Taylor (UC, Davis) and Dominic Wilson (Co-Head of Global Economic Research, Goldman Sachs).
Without making any specific investment recommendations, the debate suggests that it is too early to get back into EM assets, though there are probably some exceptions, in countries where the policy response appears to be best calibrated to the problems faced. The panel thinks that China will engage in a very prolonged credit work-out, without major acute crises, while some other EMs might indeed face crises, even though their external balance sheet problems seem much better than in the 1990s. That seems to be a difficult environment in which to make money from general long exposures to EM asset classes.
Please click here to download the full article.