This Goldman Sachs exec tells you why emerging markets might be a better investment than the US

Key Points
  • Emerging market corporate debt currently 25 percent of the market, says Sheila Patel
  • Political uncertainty in the U.S. raises questions over stocks and currency performance, she says.
Seeing cyclical shift in emerging markets: Goldman Sachs

There's opportunity in emerging market debt despite growing concerns over higher credit levels and the impact of a strong dollar, the chief executive of International at Goldman Sachs Asset Management told CNBC on Tuesday.

"There are some shifts within the emerging markets debt market that counter balance that," Sheila Patel said in relation to growing indebtedness in countries such as China.

"First of all it's a much larger market than what people have experienced in the past so that's a major difference and that's true of emerging Asia. Asia is also in a better fiscal position, but we also see emerging markets debt clients, the people that are the experts and have been investing in it for years, which includes a lot of central banks and sovereign wealth entities as well as pensions etc, we see them branching out and becoming distinguished and distinguishing amongst the different offerings within the EMD (emerging market debt)," Patel explained.

Expect less deals from Chinese companies: Goldman Sachs

She mentioned that emerging market corporate debt was currently 25 percent of the market, including many high quality firms, similar to those in developed markets, but trading at a premium yield.

In comparison, U.S. markets offer more uncertainty, including whether U.S. President Donald Trump will deliver key campaign pledges that have boosted equities, including banking stocks.

"Look at what's going on in the U.S. If you think about the moves in the U.S. both in the fixed income and equity markets there's a lot hinging on policy options which may or may not occur. Does tax reform going to happen? What happens to health care? What happens to infrastructure?," Patel said.

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