Entering text into the input field will update the search result below

Commodities, Gold And Overlooked Emerging Markets

Jun. 09, 2020 5:08 PM ETGXG, RSX, ECH, BCH, NGE, VEMAX, VEMBX1 Comment
Dylan Waller profile picture
Dylan Waller


  • Emerging market equities are down by around 10% YTD, and a handful of frontier and emerging markets are becoming too cheap to ignore.
  • Markets such as Nigeria and Russia are trading below book value and offer a 6-9% dividend yield.
  • Gold mining stocks have underperformed gold on a 10-year basis, but will likely outperform in the coming years due to heightened geopolitical risks.

Finding Value in Emerging Markets

Emerging market equities are down by around 10% YTD, and a handful of frontier and emerging markets are becoming too cheap to ignore. Notably, the sell-off in emerging market equities has produced an attractive entry point for equities in countries that rely on commodity exports for growth. Underperformers such as Chile, Colombia, Nigeria and Russia are well worth examining, as they would be major beneficiaries of a bull market in commodities. All of these stock markets collectively trade at an approximate 40% discount to MSCI emerging markets. At the moment, it is better to avoid general emerging market ETFs, such as the Vanguard FTSE Emerging Markets ETF (VWO), and to instead focus on selective shopping for emerging markets where there is currently deeper value.

ChartData by YCharts

Selective Shopping for Emerging Market Equities

Emerging market equities currently trade at around 14.2x P/E, which is not very cheap given the heightened political and economic risks that have occurred this year. The greatest pockets of value can currently be found in frontier and emerging markets that have underperformed this year due to concerns about the future prospects of commodity prices. The four markets below all trade at around 8x P/E, and the dividend yield exceeds the bond yield found in many frontier and emerging markets in Asia.



Dividend Yield

Commodity Exports





Copper exports account for around 50% of total exports





Crude petroleum and coke briquette exports account for 57% of its total exports





Petroleum exports account for 87% of total exports





Crude oil and petroleum exports account for nearly 70% of total exports






MSCI Emerging Markets





ChartData by YCharts

ChartData by YCharts

ChartData by YCharts

ChartData by YCharts

ChartData by YCharts

This article was written by

Dylan Waller profile picture
I am interested in frontier/emerging stock markets and other international markets ( ie. Japan/Korea).  My articles will primarily focus on stocks I am monitoring now based on quality of management/emerging market exposure/valuation.

Analyst’s Disclosure: I am/we are long GXG, NGE, RSX, BCH, GDX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.