Emerging Markets With Low Valuations

Emerging markets account for 80% of the world's population and 50% of GDP growth - but only 8% of stock market capitalization.

The list below contains all emerging markets based on Standard & Poor's classification. I ran a fundamental screen to get valuation with P/E FY1 (current P/E and adjusted by forecasted for EPS FY1).

Recently I did screening also with other indicators like Price/Book Value or Dividend Yield. As the results show, the lowest P/E valuation is for the Pakistan stock market. This is also the market with the highest dividend yield in the group, with 5.4.

The second most discounted is (surprisingly) Russia, which has been affected by the recent political situation. P/E valuation is 8 for this market with strong economic growth of 7-8%.

The last two countries below 10 P/E are Turkey and Thailand. High inflation weighs on both markets. Turkey also faces significant decline of foreign direct investments.

Country	FY1 P/E
Argentina	12.55
Brazil	11.33
Chile	16.23
China	14.08
Colombia	16.23
Czech Republic	14.11
Egypt	12.25
India	14.40
Indonesia	13.24
Israel	13.47
Jordan	20.91
Malaysia	11.77
Mexico	12.44
Morocco	26.85
Nigeria	17.82
Pakistan	7.91
Peru	11.16
Philippines	11.94
Poland	11.07
Russia	8.07
Slovenia	18.80
South Africa	10.59
Taiwan	10.70
Thailand	9.04
Turkey	8.88

Comments

[mtp:]

would be helpful to have a reference point for the US market to understand relative value. brazil looks interesting though.

2008 Sep 03 09:24 AM

[zawy:]

Malaysia is a play similar to Brazil: they have oil and food, and one of the safest markets, comparable to australia and singapore.

2008 Sep 03 09:34 AM