"Whichever way you go, it's time to set past expectations aside," writes Ben Levisohn, regarding...

|By:, SA News Editor

"Whichever way you go, it's time to set past expectations aside," writes Ben Levisohn, regarding emerging markets. Political turmoil in Turkey and Egypt and questions about the growth prospects of countries like Brazil and South Africa have fundamentally changed an EM "narrative" that has produced 12% annual returns for the better part of 10 years. Underneath it all lies China, where cooling economic activity and a precarious shadow banking system threaten to destabilize the global recovery. Nevertheless, a 12.5% decline this year has the MSCI EM Index (EEM, DEM) trading at 1.5x book value, a 20% discount to developed-market stocks.