Goldman lifts MSCI EM target on AI boost, flags Iran deal relief for forex, bonds

The brokerage raised its benchmark ​index target to 2,000 from 1,850, implying a nearly 12% upside from its last ​close of 1,787.88.

Goldman Sachs has raised its 12-month target for MSCI emerging markets ​index, citing AI-driven earnings ⁠growth, and said a quick resolution to the Iran conflict ‌could boost some currencies and offer relief to bond markets.

The brokerage raised its benchmark ​index target to 2,000 from 1,850, implying a nearly 12% upside from its last ​close of 1,787.88.

Equities across ​emerging markets have been on a rally, led by AI-driven North Asian markets such as South Korea and Taiwan, with the ⁠benchmark index up 9% in May, outperforming a 5% climb in the S&P 500.

“We think this earnings-driven rally can extend given a longer memory upcycle, leading to further increases in our earnings expectations and index targets in ​Korea and ‌Taiwan,” Goldman said in ⁠a note ⁠on Wednesday.

South Korean heavyweights SK Hynix and Samsung Electronics each topped a $1 trillion valuation ​last month, buoyed by booming demand for high-end memory ‌chips that has created a supply crunch and ⁠driven up prices.

Goldman now projects the index’s earnings-per-share (EPS) to come in at 55% this year, up from a previous forecast of 45%.

For 2027, the Wall Street brokerage expects EPS growth of 20%, a notch higher than its prior forecast of 19%.

However, excluding North Asia, which roughly accounts for half of the index weight, Goldman forecasts only 11% EPS growth for both 2026 and 2027, reflecting the massive uptick ‌from AI-driven gains. Beyond tech-heavy indexes, rate-sensitive markets such as South Africa, ⁠Brazil and the UAE could outperform on ​optimism around a potential U.S.-Iran deal, Goldman said.

In the event of a conflict resolution, South African rand , Korean won, Polish zloty and Chilean peso could ‘stand out’ ​among currencies, ‌Goldman said, while local currency bonds could also see ⁠a “pathway for relief”.

© ZAWYA