Emerging markets close in on global stocks

Emerging Markets Index country constituents Greece (+18.8 percent), Poland (+13.3 percent), China (+12.4 percent) and Russia (+11.7 percent) have led Index in terms of return since the beginning of the third quarter, the report shows.

In addition, as of September 17, the current one-year forward weighted average price-to-earnings-ratio (P/E) for the Russell Emerging Markets Index is 17.9 as compared to a 21.9 P/E for the Russell Global Developed Index. This widens the gap from January 2, 2013, when the P/E ratios for these two indexes were 17.5 and 18.0, respectively.

“China has been a major contributor to the performance of the Russell Emerging Markets Index in recent months, due to its size within the index and its strong influence on investor confidence in the region,” says Gustavo Galindo, emerging markets portfolio manager at Russell Investments. “As investors appear to have adjusted to the prospect of slowing growth and negative news on China has ebbed, Chinese equities have benefitted.

“A better China picture, improving fundamentals and attractive valuations relative to developed global markets help underscore the continued important role emerging markets can play as part of a broadly diversified global multi-asset portfolio,” he adds.