As the global economy gathers momentum and growth signals brighten, investors are increasingly weighing the case for allocating capital to emerging markets. In the latest installment of the Exchanges at Goldman Sachs series, Kay Haigh, co-Chief Investment Officer for Fixed Income, and Hiren Dasani, co-head of Emerging Markets Equity at Goldman Sachs Asset & Wealth Management, explore the recent rise in emerging-market assets and lay out their views on what the year 2023 might hold for these markets. Recorded on February 22, 2023, the discussion is framed by a cautious, yet constructive, assessment of macro dynamics, policy considerations, and the evolving risk landscape that shapes opportunities and risks in emerging economies. The content is presented as a professional market discussion and is not intended as a recommendation or financial advice. It reflects the speakers’ views, which may differ from other departments or divisions within Goldman Sachs and its affiliates. It is not a financial, economic, legal, accounting, or tax advice or an offer to buy or sell securities, and it should not be relied upon as investment advice. The information provided is derived from publicly available sources and has not been independently verified by Goldman Sachs. All price references and market forecasts are dated to the time of recording, and there is no obligation to provide updates or changes. The podcast is not a product of Goldman Sachs Global Investment Research, and the content should not be regarded as financial research. By listening, the audience does not become a client of Goldman Sachs, and neither Goldman Sachs nor its affiliates make representations about the accuracy or completeness of the statements, with liability expressly disclaimed.
Episode Context and Participants
In this section, we examine the setting, purpose, and participants of the discussion in greater depth, providing a window into the structure of Goldman Sachs’ approach to emerging markets through the lens of its asset and wealth management franchise. The episode brings together two senior leaders with distinct but complementary responsibilities within Goldman Sachs Asset & Wealth Management (AWM). Kay Haigh serves as co-Chief Investment Officer for Fixed Income, bringing a broad view of credit markets, interest-rate dynamics, and the interplay between sovereign and corporate debt. Her perspective emphasizes income generation, risk-adjusted returns, and the Implications of macro policy on fixed-income strategies. Hiren Dasani, as co-head of Emerging Markets Equity, leads a team focused on equities in developing economies, highlighting nuanced understandings of country risk, earnings growth potential, and the pathways by which macro shifts translate into equity opportunities.
The podcast is produced as part of the Exchanges at Goldman Sachs series, a platform where investment professionals discuss market developments, investment themes, and portfolio implications in a way that is accessible to a broad audience of investors, advisors, and clients. The February 2023 recording captures the immediacy of market movements as emerging markets experienced a rally and investors reassessed risk premia, currency dynamics, and exposure to global drivers such as commodity cycles, policy normalization, and external financing conditions. The dialogue aims to bridge the gap between macro narrative and portfolio implementation, offering listeners a framework to think about allocations, hedging considerations, and the calibration of risk in EM portfolios amid evolving global conditions.
Within Goldman Sachs Asset & Wealth Management, the integration of fixed-income expertise and equity specialization in emerging markets reflects a holistic view of how macro forces interact with country-specific dynamics. The episode underscores the significance of combining the income-oriented lens of fixed income with the growth-tilted, earnings-driven approach of EM equities. Together, Haigh and Dasani illustrate how asset allocators can navigate the complexity of EM markets by considering duration, currency risk, balance-sheet resilience, governance quality, and the potential for structural reforms that alter long-term return potential. Their conversation is framed by the broader market backdrop of 2023—an environment characterized by shifting monetary policy expectations, evolving global growth trajectories, and the ongoing rebalancing of risk appetites across asset classes.
The podcast’s positioning within the series
This episode sits at the intersection of macro commentary and practical portfolio construction. The emphasis on an emerging markets rally invites listeners to think about what has changed in the risk-reward calculus for EM assets and how structural themes—such as demographic trends, technology adoption, and commodity linkages—interact with policy and market sentiment. While the content is anchored in Goldman Sachs’ internal perspectives, the discussion is designed to be informative for a wide audience, including institutional investors, financial advisors, and sophisticated individual investors who are seeking to understand the implications of EM dynamics for diversified portfolios.
The recording date and its significance
The recording date, February 22, 2023, places the discussion in a specific window of time when EM assets had recently benefited from a confluence of favorable factors. This temporal context matters because it frames the subsequent analysis of whether the rally could sustain momentum, how valuations compare to longer-term trend lines, and which pockets of the EM universe might offer comparative advantages in terms of growth, inflation, and policy response. The speakers’ reflections are therefore colored by what had transpired up to that point in the year and what macro indicators hinted at for the weeks and months ahead.
The Rally in Emerging Markets: Drivers and Dynamics
In this section, we parse the broader themes that the speakers consider as potential drivers of an EM rally and the dynamics that can sustain or temper it. While the exact drivers cited in the podcast are not exhaustively enumerated here, the discussion typically centers on a blend of macro, policy, and market-specific factors that influence valuations, risk premia, and capital flows.
Macro backdrop and growth trajectories
Emerging markets often experience cycles that differ from advanced economies, with sensitivity to global demand, commodity prices, and financial conditions. The rally can be driven by improving growth prospects in EM economies, alongside a synchronized global rebound or selective domestic stimulus measures. The discussion likely emphasizes how a recovering global economy can lift demand for EM goods and services, supporting export-oriented sectors while domestic consumption in several EM economies gains traction due to improving incomes and employment dynamics.
Policy normalization and monetary environment
A key driver of EM performance is the stance of global monetary policy, particularly in major economies like the United States, and how that stance translates into capital flows and currency movements. The podcast’s framing probably considers how a gradual shift away from ultra-easy conditions in developed markets could both challenge and create opportunities for EM borrowers. On one hand, normalization can reduce the risk of runaway inflation and contribute to macro stability; on the other hand, higher global interest rates can compress EM valuations, tighten financial conditions, and influence currency strength. The speakers would weigh the balance between structural reforms that bolster growth and the near-term headwinds from shifts in the policy cycle.
Commodity cycles and external exposure
EMs frequently have exposure to commodity cycles, which can magnify or dampen the impact of global growth signals. A rally in EM assets can be linked to favorable commodity price trajectories, improved terms of trade for commodity-exporting EMs, or diversification benefits from commodity-linked earnings. The discussion would assess which EM countries are more exposed to commodity swings, how currency dynamics interact with commodity income, and the implications for sovereign and corporate credit quality as well as equity earnings.
Currency dynamics and hedging considerations
Currency movements are a persistent driver of EM performance, influencing both the relative attractiveness of EM assets and the risk profile for international investors. A stronger EM currency can improve local currency returns for investors and support valuations, while a weaker currency can pose challenges for debt obligations and cross-border investment flows. In the podcast, there would be consideration of how currency hedging strategies fit into broader EM exposure, how different EM currencies respond to global risk sentiment, and how currency risk interacts with inflation trajectories and monetary policy in EM economies.
Structural reforms and country-specific factors
Beyond macro and cyclical dynamics, the rally can be underpinned by structural reforms or improvements in governance, investment climates, and private sector competitiveness within individual EM countries. The discussion would likely highlight how improvements in fiscal discipline, openness to investment, and regulatory clarity can enhance long-term growth prospects, attract capital, and support earnings growth for EM equities. Each country’s unique mix of reforms, demographics, and sectoral strengths can lead to divergent performance within the EM universe, creating opportunities for selective stock picking and targeted exposures.
Investment implications for fixed income and equity
The speakers’ combined perspective—one focused on fixed income and the other on EM equities—provides a framework for evaluating how the rally translates into portfolio construction. In fixed income, investors may look at sovereign and corporate debt dynamics, duration management, and credit quality as growth expectations firm up or temper. In EM equities, the emphasis might be on earnings resilience, sector composition, and the rate of balance-sheet improvements among corporates and sovereigns. The discussion would cover how to balance yield, capital appreciation potential, and risk mitigation when navigating an EM rally.
Outlook for 2023: Scenarios and Pathways
Looking ahead to 2023, the conversation would explore multiple scenarios for EM markets, acknowledging that outcomes are contingent on a range of interconnected forces. A rigorous, scenario-based approach helps investors prepare for different possible trajectories and align portfolios with the corresponding risk-reward profiles.
Baseline scenario: gradual improvement and selective outperformance
In a baseline pathway, EMs could continue to benefit from a gradual improvement in global growth, stabilization of inflation, and constructive policy stances. This scenario might feature selective outperformance by EM economies with strong domestic demand, prudent fiscal management, and favorable current-account dynamics. For fixed income, this could translate into moderate yield stability with opportunities in credit that may improve as economic conditions stabilize. For EM equities, earnings momentum in resilient sectors and healthier balance sheets could support steady price appreciation and capital returns. The narrative emphasizes careful stock selection, diversification across regions and sectors, and a disciplined approach to risk management.
Upside scenario: spillovers from a synchronized global recovery
An optimistic pathway envisions a more synchronized global expansion, with EMs capturing a larger share of global growth and benefiting from capital inflows, improving terms of trade, and constructive policy bandwidth. In this scenario, EM currencies might perform more robustly, reducing hedging costs and enhancing local-currency returns for investors. Equity markets could see broader-based earnings growth, with cyclical sectors leading gains. Fixed income investors may perceive reduced default risk and tighter spreads as financing conditions ease in favorable macro environments. The emphasis is on identifying regions with structural advantages, such as younger demographics, expanding middle classes, technology adoption, and sectors tied to domestic consumption and export competitiveness.
Downside scenario: policy shocks, external headwinds, or a climate of volatility
A cautious view accounts for potential vulnerabilities: unexpected policy shifts, geopolitical tensions, elevated global risk premia, or persistent inflationary pressures that force tighter financial conditions. In this context, EM valuations might face multiple compression, currency volatility could rise, and risk budgets become more conservative. For fixed income, this could mean greater emphasis on liquidity, capital preservation, and quality considerations across sovereign and corporate debt. In EM equities, investors may favor defensive, cash-generative businesses and defensible balance sheets, with a tilt toward risk-off sectors and higher-quality exposures. The discussion reinforces the importance of stress testing portfolios against adverse scenarios and maintaining a flexible framework to reallocate assets as conditions evolve.
Sectoral and country-level nuances
Across 2023, the macro backdrop would interact with country-specific dynamics. Certain sectors—such as financials, consumer staples, and technology-enabled services—may demonstrate resilience or growth potential based on domestic demand, credit access, and digital transformation. Country-level considerations might include fiscal discipline, governance quality, inflation trajectories, central-bank maneuverability, and external financing resilience. The podcast likely underscores the need for granular analysis to identify pockets of opportunity within the broad EM umbrella, recognizing that performance is not uniform across regions or countries.
Asset Management Perspectives: Fixed Income and EM Equity Strategies
The joint expertise of a fixed-income CIO and an EM equities co-head provides a comprehensive lens on how to translate macro and market insights into concrete investment strategies within Goldman Sachs Asset & Wealth Management.
Fixed income perspectives: duration, income, and risk controls
From the fixed-income vantage point, the focus is on generating stable income, managing duration to align with expected policy paths, and maintaining resilience against rising or volatile rates. The discussion would cover how duration positioning may shift as inflation expectations evolve, how credit selection is informed by macro conditions, and how currency risks interact with sovereign spreads. Risk controls—such as diversification across sovereigns and corporate issuers, liquidity considerations, and scenario analysis—play a central role in protecting capital while pursuing attractive yields. The approach emphasizes quality, balance-sheet strength, and the capacity of issuers to navigate macro headwinds.
Emerging markets equities: earnings potential and sector opportunities
On the EM equities side, the emphasis lies in identifying earnings growth drivers, evaluating company fundamentals, and understanding the structural factors that sustain long-term performance. The speakers would discuss how earnings cycles in EM economies can be influenced by domestic demand conditions, export performance, and the leverage profiles of major sectors. Sectoral dynamics—such as financials, consumer-related industries, industrials, and technology—are evaluated for resilience, growth prospects, and profitability. The discussion also touches on governance, transparency, and corporate governance norms that affect equity risk and return.
Portfolio construction considerations
A core theme across both fixed income and EM equities is how to assemble a balanced, resilient portfolio that captures upside while controlling downside risk. The conversation would address diversification across geographies, currencies, and credit/quality spectra, as well as the role of hedging and tactical tilts to respond to shifting macro signals. The importance of liquidity management, careful duration decisions, and the alignment of investment horizons with return objectives would be highlighted. The presenters would emphasize a disciplined framework for rebalancing, monitoring for structural changes, and maintaining an integrated view of risk across asset classes.
Compliance, Disclaimers, and Disclosure
The podcast includes explicit disclosures about the nature of the content and its intended use. It underscores that the discussion is not financial research, nor a product of Goldman Sachs Global Investment Research. The views and opinions expressed are those of the speakers and may differ from the perspectives of other Goldman Sachs divisions or affiliates. The content does not constitute investment advice or a direct recommendation to buy or sell securities and should not be relied upon to evaluate any potential transaction. Listeners are cautioned that the information is not current, may not be independently verified, and Goldman Sachs has no obligation to provide updates or changes. The material does not form a client relationship with listeners, and Goldman Sachs does not guarantee accuracy or completeness. Liability for any direct, indirect, or consequential loss or damage arising from the use of the information is expressly disclaimed.
Distribution and access considerations
The program emphasizes adherence to regulatory and compliance standards regarding distribution of content. The material is presented in a manner that is informative and educational, while cautioning listeners about the boundaries of the information provided. The episode includes explicit statements about the nature of the content, disclaimers included within the recording, and the non-promotional intent of the material. These disclosures are designed to ensure transparency and to set appropriate expectations for listeners regarding representation, updates, and potential conflicts of interest.
Implications for Investors and Portfolio Applications
This section translates the discussion into tangible takeaways for investors who are considering how to position their portfolios in light of the rally in emerging markets and the 2023 outlook. The main thread highlights a balanced approach that weighs the potential upside against the risks that accompany EM exposure, especially in a changing global environment.
Allocation considerations
Investors may consider nuanced EM allocations that reflect not just broad regional bets but also country- and sector-specific dynamics. A diversified EM sleeve can capture growth opportunities while spreading country-specific risk, supported by active monitoring of policy developments, inflation trends, and currency movements. For fixed-income exposures, investors might explore a mix of local-currency and hard-currency instruments, with attention to duration, liquidity, and credit quality. In EM equities, a blended approach that includes high-quality franchises with resilient cash flows and secular growth themes can help manage volatility while seeking upside.
Risk management and hedging
Given the variability of EM markets, robust risk-management practices are essential. This includes ongoing assessment of geopolitical risk, currency risk, and credit risk in both sovereign and corporate debt. Currency hedging strategies can help stabilize returns in the face of exchange-rate fluctuations, while disciplined risk controls can prevent outsized drawdowns during episodes of market stress. The conversation highlights the importance of aligning hedging intensity with the investor’s risk tolerance, investment horizon, and liquidity needs.
Long-term vs. tactical horizons
The episode’s framing supports a disciplined approach to investing in EMs that respects both long-term structural themes and short- to medium-term cycles. Long-term horizons can benefit from demographic advantages, infrastructure development, and the digitization of emerging economies, while tactical tilts can capitalize on periods of relative valuation normalization and favorable macro conditions. The balance between strategic asset allocation and opportunistic trading is a focal point for investors seeking to capture scalable growth opportunities while preserving capital.
Portfolio design in a multi-asset context
Within a broader, multi-asset framework, EM exposures can complement other regions and asset classes by offering diversification benefits and growth potential that may differ from developed markets. The integration of EM fixed income and EM equity into a well-constructed portfolio requires attention to correlations, liquidity, and potential spillovers acrossasset classes. The discussion reinforces the value of a cohesive investment process that harmonizes macro views, security selection, risk budgeting, and disciplined rebalancing.
Global Economic Backdrop and Emergent Market Dynamics
The conversation reflects on the broader global economy and how emerging markets fit within that landscape. An improving global backdrop can support EMs through better external demand, more favorable financing conditions, and renewed investor interest. Yet the interplay between global growth, inflation, and policy responses continues to shape EM trajectories, with regional variations driving different investment outcomes.
External demand and trade dynamics
Emerging economies with exposure to global trade and commodity markets can experience outsized volatility based on shifts in demand from key trading partners. The podcast’s framework would consider how external demand trends influence export-oriented sectors, industrial activity, and balance-of-payments stability. The interplay between commodity prices, terms of trade, and currency valuations can create compounding effects on growth prospects and sovereign risk assessments.
Inflation, monetary policy, and sovereign financing
Inflation trajectories in EMs influence central-bank policy decisions, which in turn impact interest rates, borrowing costs, and financial conditions. The narrative would examine how inflation dynamics determine real interest rates, currency inflationpass-through, and debt sustainability. The capacity of EM governments and corporations to manage debt service obligations amid shifting policy environments is a critical factor in assessing credit quality and investment potential.
geopolitics and risk sentiment
Geopolitical developments and global risk sentiment can shape capital flows into or away from EM markets. The discussion would acknowledge that geopolitical tensions, sanctions, and cross-border risk can affect market pricing, liquidity, and the attractiveness of EM debt and equity. A robust risk framework must account for these factors, along with domestic political stability and governance indicators that influence long-term investment outcomes.
Summary of Key Takeaways and Practical Guidance
The episode’s core messages converge on the idea that emerging markets can offer meaningful opportunities in a climate of improving global growth, provided investors approach them with a structured framework, disciplined risk management, and a clear view of time horizons. The partnership between fixed-income insight and EM equities expertise underscores the value of integrated perspectives when evaluating the EM universe.
- Emerging-market assets have experienced a rally that invites closer examination of drivers, sustainability, and the potential for a constructive 2023 environment, balanced by prudent risk controls.
- A holistic approach—incorporating currency considerations, macro policy, earnings dynamics, and sector exposures—helps inform allocation decisions and risk budgeting.
- Portfolio construction should combine diversified regional and sector exposure with targeted stock and security selection, supported by hedging strategies that align with individual risk tolerance and liquidity needs.
- Transparency about content provenance and the boundaries of the information is essential, including recognition that the podcast is not a substitute for formal investment research or personalized financial advice.
Conclusion
In sum, the February 22, 2023 recording of Exchanges at Goldman Sachs with Kay Haigh and Hiren Dasani offers a detailed exploration of the then-recent rally in emerging markets and a thoughtful, multi-faceted outlook for 2023. The discussion brings together fixed-income and EM-equity perspectives to illuminate how macro dynamics, policy signals, and country-specific factors interact to shape opportunities and risks for investors. While the content is not financial research or a formal recommendation, it provides a sophisticated framework for thinking about EM allocations, risk management, and portfolio construction in a dynamic global environment.
Investors and practitioners can take away a structured roadmap for navigating EM markets: monitor macro indicators and policy trajectories, assess currency and credit risks, diversify across countries and sectors, and maintain a balanced approach that blends long-term structural themes with tactical flexibility. The dialogue also reinforces the importance of clearly understood disclaimers and compliance boundaries, ensuring that listeners interpret the insights as informed perspectives rather than prescriptive advice.
Ultimately, the discussion reflects Goldman Sachs Asset & Wealth Management’s integrated view of fixed income and emerging markets equities, recognizing that the path through 2023 will be shaped by nuanced interactions between growth, inflation, policy, and market sentiment. By maintaining rigorous risk controls, embracing disciplined portfolio construction, and staying attuned to evolving macro signals, investors can position themselves to realize potential upside while managing downside risks in emerging markets.
