Emerging Markets Reach Parity With Developed Markets


Thomas, over at Alphaville, picks up on a piece of research by Dresdner

Kleinwort’s James Montier. The key datapoint? Emerging-market

equities are now trading at the same multiple as developed markets, and "as

far as he can remember, that didn’t even happen during the last great

emerging market boom of the early 1990s." Check out the Alphaville post

for the chart.

I’d be much more worried about this if someone could explain to me why emerging-market

equities should trade at a lower multiple than developed markets. After

all, they generally have much higher growth rates, which would tend to imply

perhaps that they should trade at a higher multiple. And big emerging-market

companies today have no more difficulty raising money internationally than their

developed-market competitors.

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