VWO - Goldman modestly upgrades outlook for emerging markets equities

• Goldman Sachs ( GS ) became more constructive on emerging markets equities as China's re-opening post-COVID point to improving European growth prospects and softening U.S. inflation, according to a note dated Thursday.
• Caesar Maasry, Goldman's head of Emerging Market Cross Asset Resarch, said he now expects MSCI's index of emerging market equities to reach 1,150 in the next 12 months vs. his previous target of 1,075. Regional preferences are unchanged, with Asia offering the largest  upside (11%) and Latin America the least (4%).
• "With a few exceptions, our return targets suggest less than 10% local equity return, illustrative of our view that risk assets are close to pricing in a ‘soft landing’ in the US (we forecast a flat S&P 500 from current levels) and do not offer a particularly attractive entry point," Maasry wrote.
• The view of further emerging market outperformance is driven by returns in North Asia and MENA primarily, and are based on the outlook for Chinese growth and oil prices.
• See the performance of iShares MSCI Emerging Markets ETF ( NYSEARCA: EEM ) and Vanguard FTSE Emerging Markets ETF ( NYSEARCA: VWO ) over the past three years.
• Last month, money managers haven't been this pessimistic on U.S. stocks in more than 17 years.

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