Emerging markets have stolen the headlines since the start of 2014 with a high volatility and intensely negative news flow influencing investor behaviour. As a result, stock-level dispersion in equities has decreased, showing signs of outflows from some emerging markets, says ‘Notes from the frontline: Market commentary from Unigestion’s Equity team.’ It says emerging markets are currently trading at a significant discount to developed stocks with the price to book ratio of MSCI EM 30 per cent lower than the MSCI World Developed. This means that some risks have already been well priced-in by the markets. However, regardless of the identified risks, all is not doom and gloom for investors in emerging markets equities and that market turbulence will also inevitably create opportunities, it says. Countries such as Taiwan and Korea, for example, still exhibit a generally positive economic outlook and are showing that they can navigate well in a low risk environment.
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