Mirae Asset outlines a multi year recovery in emerging market equities driven by earnings growth, improving fundamentals, and supportive global conditions. It challenges the view that EMs remain fragile, highlighting stronger balance sheets and a roughly 25% valuation discount relative to developed markets.
2018 Emerging Markets Mid-Year Outlook A Multi-Year Recovery
Mirae Asset Global Investments
Rahul Chadha, Malcolm Dorson
Research
14 Pages
Key Takeaways
Valuation Discount Persists: Emerging markets trade at roughly a 25% discount to developed markets, despite comparable or stronger earnings growth trajectories and improving return on equity metrics.
Earnings Growth Acceleration: EM corporate earnings growth is expected to exceed 15% in 2018, outpacing developed markets and supported by a synchronized global recovery and rising commodity demand.
Dollar Sensitivity Declining: External debt exposure has fallen significantly since prior cycles, with many EM countries improving current account balances by over 2% of GDP on average.
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