One reason to be relatively optimistic about emerging market equities is their low valuation relative to their developed market counterparts. For example, price/12m forward earnings ratios are around their five-year averages in emerging markets, on average, whereas this ratio is well above its five-year average in developed markets. This should provide some support to emerging market equities in the face of a variety of headwinds, including slower economic growth in emerging markets and less accommodative monetary policy in the US.
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