EM To DM Valuation Spread Nears Record Levels

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Emerging market equities have been trading at a steep discounts to the developed market for some time now, implying that the risk in those markets is abnormally high (or the risk in DM is unusually low). But most according to Barclays analysts Joao Toniato and Ian Scott, most measures of risk don’t back this up and EM equities could be poised to outperform. “With EM equities trading at a c. 28% discount to DM and a c. 23% discount to their 10-year average (in terms of P/Book), we believe few investors would argue against the idea that emerging market (EM)…

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