Emerging Market Out-Earned Developed Market, Didn’t Meet Expectations

The emerging market has out-earned the developed market when compared to the earnings peak witnessed in 2007/2008, though its multiples have contracted, reports Citi.

Markus Rosgen and Yue Hin Pong of Citi thus feel emerging markets did well, but should have done better.

Emerging market earnings vs valuation

Markus Rosgen and team point out that the emerging market’s earnings are 14% above their pre-GFC peak, while it was 7% off for AC world. However, emerging market equities are down 26%, while AC world has witnessed deceleration of only 11%.

As is evident from the following graph, for EM in aggregate, its EPS number is some 14% higher than the prior peak, thus marginally out-earning the...