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China Spurs Emerging-Market Rout, Not Fed

Goldman Sachs Asset Management says China's policy shifts are increasing volatility and driving risk premiums higher.

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China’s policy shifts are a bigger driver of the selloff in emerging markets than the Federal Reserve’s decision to dial back stimulus, according to Goldman Sachs Asset Management.

Volatility will rise toward its long-term average, and that means an increase in risk premiums, said Philip Moffitt, head of fixed income in Sydney for Asia and the Pacific at Goldman Sachs Asset Management, which had $991 billion of assets under supervision worldwide as of September. The risks for different emerging economies will become more idiosyncratic and Mexico presents a buying opportunity following the rout, he said.

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