According to data compiled by Bloomberg, the MSCI Emerging Markets Index is valued at 14.1 times reported profits compared with ratios of 14.9 for the MSCI World Index, leaving emerging market stocks trading at the highest valuations relative to advanced country shares in more than two years.
Last time similar figures were reached in 2008, the emerging markets sank 48% in four months. Leading banks predict this time will be different however as developing nations have less debt, more profitable companies and are growing twice as fast as developed nations.
Global money managers are more bullish on emerging markets than any other regions. Global head of macro and investment strategy at HSBC Global, Philip Poole even suggested there is a case for a re-rating of emerging markets relative to the developed world.
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