Emerging markets to withstand China’s economic woes

For the past three decades, China’s economy has been a dominant factor in emerging markets for economic and corporate growth. Goldman Sachs Group Inc. strategists say that’s now changing.

Calling it an “ongoing long-term divorce,” the US bank said the impact of slowdowns and downgrades in the world’s second-biggest economy on other developing nations has declined “precipitously” over the past three years. That suggests China’s current bout of macro problems and a stocks selloff may not drag down emerging markets as they would in the past.

“The spillovers from Chinese growth revisions appear to be declining over time,” strategists Caesar Maasry, Jolene Zhong and Lexi Kanter wrote in a note Monday. “Earnings-per-share data, coupled with the diverging growth differentials of emerging markets ex-China and China, do suggest there is a slow divorce occurring — an observation we think most investors will take solace given the current concerns.”

Fidelity Emerging Markets Limited (LON:FEML) is an investment trust that aims to achieve long-term capital growth from an actively managed portfolio made up primarily of securities and financial instruments providing exposure to emerging markets companies, both listed and unlisted.

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