Hong Kong Wande News Agency reportedThere is a big difference between Fexing and Goldman Sachs Group about emerging markets.Andrew Lapthorne, an analyst at Societe Generale, believes that the rising momentum of emerging markets in 2017 has been "broken" and there are several reasons to be cautious about emerging markets. Goldman Sachs Group insisted on being bullish on emerging markets, both in his weekly report and in his top trading strategy in 2018.

SocGen analysts have three reasons to be bearish on emerging markets.

First, Andrew Lapthorne pointed out that the MSCI emerging markets index fell for two consecutive weeks, suggesting that the "carnival" of emerging markets in 2017 is coming to an end.The MSCI emerging markets index fell 50bp last week and has pulled back 3% the week before, suggesting that the upward momentum since the start of the year has been broken.

Interestingly, Albert Edwards, a big short seller of Societe Generale, said on Monday that US stocks were also overbought. The RSI of the S & P 500 has been above 81 for 14 consecutive weeks, its highest level since 1995.

(note: RSI, the relative strength index, is the abbreviation of Relative Strength Index. According to the strength index theory, any big rise or fall in market prices varies between 0 and 100. According to the normal distribution, it is considered that the RSI value varies between 30 and 70, and it is usually considered that the market has reached an overbought state at 80 or even 90, so the market price will naturally fall back and adjust. When the price falls below 30, it is considered oversold, and the market price will rebound. )

Second, the weak dollar is the open secret that emerging markets outperform developed markets.According to Andrew Lapthrone, there is little difference in 2017 between the developed market index and the emerging market index in terms of local currency (the red line represents the performance of emerging markets, as shown in the chart below). A stronger dollar, coupled with debt problems in emerging market countries, will have a significant impact on asset performance in emerging markets.

Third, the concentrated sell-off of stocks of the companies with the worst financial conditions will be the catalyst for the "collapse" of emerging markets.Companies with poor finances have risen 30 per cent since 2017, but have fallen 8 per cent in the most recent month, according to Puneet Singh, an analyst at Societe Generale. The fall in the share prices of companies with poor financial conditions has not had a catastrophic impact, but a high degree of vigilance is still needed, Andrew Lapthrone said.

Goldman Sachs Group: insist on bullish on emerging Markets

Goldman Sachs Group has been advising his clients to increase asset allocation in emerging markets in a weekly report for several weeks. Long emerging market index is also one of Goldman Sachs Group's top trading strategies in 2018.

Goldman Sachs Group's reasons for being bullish on emerging markets:Strong and synchronized global growth is expected to continue into 2018. From a profit perspective, there is still plenty of room for emerging market companies to make a profit. In local currency terms, emerging market earnings per share have repaired the "damage" suffered between 2010 and 2016 and are expected to grow by 10 per cent in 2018.

From a valuation perspective, emerging market stocks are not cheap compared to their own historical levels, currently at the top 14 per cent of the historical price-to-earnings range, compared with US stocks and relative to the post-38 per cent level of the historical range. This is expected to provide a buffer for a global risk aversion. Although emerging market equities have performed well in 2017, the cumulative amount of overseas money flowing into major emerging market equities is still below the historical average.