Who out there is concerned about the sustainability of the rally in all things Emerging Markets?

Our hands are raised and you can review some of our concerns in detail in our handy emerging markets section here.

The list of worries is long, but you wouldn’t know it to look at flows data.

Essentially, EM is benefiting from the same dynamic that grips all asset classes – it’s a vol. seller’s/carry trader’s paradise and until there are convincing signs that DM central banks are serious about rapid normalization (a laughable combination of words considering how often they’ve reneged on the most modest of hawkish leans), that’s likely to persist.

The resiliency of EM in many ways captures the triumph of central bank liquidity over pretty much all other factors. EM is almost perpetually plagued by idiosyncratic country risk and by a correlation to sometimes volatile commodity prices. In that regard, “this time” is most assuredly not “different.” But none of that matters as long as DM central banks are still engaged.

True, the rapid rise in DM rates following what’s now generally seen as a misstep by Draghi in Sintra late last month caused a bit of turmoil as some EM debt funds saw outflows, but generally speaking, the narrative hasn’t changed.

If you want proof of just how ebullient EM is, look no further than South Korea, into which offshore money is pouring despite the fact that last time we checked, the country was still really, really close to North Korea.

So the only question here is this: “what does Goldman think?”

Not really, but in case that is a question you were asking yourself, here’s the bank’s latest take excerpted from their weekly GOAL Kickstart note…

Via Goldman

Both in credit, equity and FX, EM returns this year have been very strong, and EM equity in dollar terms is the top performing asset YTD among those we track (Exhibit 8).