Slowing economic growth in developed markets against rising growth in many emerging markets (EMs), along with increasing capital investment, is likely to be a key theme in coming years, with the potential for strong outperformance by EM share markets, according to Steven Gray, the head of global emerging markets (GEM) at Eastspring Investments.
“Emerging markets are very unloved at the moment, and have de-rated considerably since 2010 – from trading at a premium relative to developed markets to trading at a huge discount relative to developed markets,” said Mr Gray, as the charts below show.
“While EMs have disappointed, that is priced into markets. So relative valuations are now very attractive to investors and expectations are low.
“EMs now represent an exciting value and diversification opportunity for investors as EMs often behave differently to developed markets,” he said.
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