Increased interest in emerging markets from new ETF’s and hedge funds has made bargains scarce says the frequently quoted Mark Mobious in this recent Financial Times article.
But despite their recent strength, emerging markets are not too highly rated. They are on single-digit price/earnings ratios, dividend yields of 5-7 per cent and price-to-book valuations of one to two.
“Historically, markets are not expensive, which poses a dilemma for us. Being bottom-up value investors, we have stuck to our knitting, holding on to stocks and searching for more.”
Investors generally demand a higher return to hold emerging market stocks due to poor oversight, lack of property rights, and political risk. A recent investment theme has been the difficulty of diversification due new correlations of instruments which previously had been considered unrelated.
Posted: October 5th, 2006 under Emerging Markets, Equities, General.
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