BlackRock's global chief investment strategist Ewen Cameron Watt asked just this in a recent commentary, at which time emerging market equities were trading at just 1.4 times book value, according to Morgan Stanley.
Mr Cameron Watt said this was close to levels of previous emerging market troughs but he points to the data in the chart as a reason why "it is close, but no cigar".
Profits are key to stockmarket returns so investors should pay close attention to this chart. It shows earnings per share dropping more than 25 per cent from their mid-2011 peak, which Mr Cameron Watt said was "the longest earnings recession in emerging market history", according to MSCI data.
Materials, industrials and energy have been particularly hard hit thanks to weak domestic growth, profit margin squeezes and a strong dollar, Mr Cameron Watt said.
Headline numbers can, of course, mask what is happening in individual countries so it is worth investors with emerging markets exposure understanding how their portfolio is plugged into emerging markets. China now makes up 24 per cent of the MSCI Emerging Market index compared to just 5 per cent 15 years ago, for instance. Being more selective in developing markets may be more important than it has been for a long while.
Source: MSCI, BlackRock
