/biz/ - Business & Finance

>>24507395
>The only problem I have with this is how much funding comes from IMF/USAIDS in these countries. Obviously "value" EM stocks should have enough cash to survive, but EM stocks are still trading at 10-15x earnings. Would still get hit if "it" happens.
The emerging market index does have a bunch of shitty countries' stocks in them but if you look at the allocations, the vast majority of the money is invested in China, Korea, and Taiwan. These countries, to the best of my knowledge, do not receive foreign aid from the US. Grantham has stated that over 50% of world GDP comes from emerging markets and they are the fastest growing markets.

Europe is lucky to get even 1% GDP growth in the future and the US is looking at maybe 1.5% GDP growth.

You're right about many EM stocks having PE ratios that are kind of high but they're still cheap compared to the US. Grantham is really pushing EM value stocks, though. His firm, GMO, projects that EM stocks will have about a 2.5% (0.5% real) compounded rate of return over the next 7 years. However, they project EM Value to return about 11% (9.1% real) over the next 7 years. That is a huge difference between all other other major asset classes.