Emerging markets close in on global stocks

In September, the Russell Emerging Markets Index returned 4.5 percent as compared to a 5.9 percent return for the Russell Developed Index. In September, the Russell Emerging Markets Index returned 4.5 percent as compared to a 5.9 percent return for the Russell Developed Index.

A key measure of equity performance shows emerging markets underperforming global equity markets this year, but the performance gap is narrowing, new research shows.

The Russell Emerging Markets Index, published by Russell Investment Group, lost -2.4 percent year-to-date as of September 17. This compares with a positive a 17.3 percent return for the Russell Global Developed Index for the same time period. 

For the third quarter as of September 17, however, the gap between emerging market and global equity stocks has narrowed.

The Russell Emerging Markets Index returned 4.5 percent as compared to a 5.9 percent return for the Russell Developed Index. And for the month of September so far, the Russell Emerging Markets Index returned 6.4 percent, outpacing the Russell Developed Index (4.0 percent) by nearly 2.5 percent.

Emerging Markets Index country constituents Greece (+18.8 percent), Poland (+13.3 percent), China (+12.4 percent) and Russia (+11.7 percent) have led Index in terms of return since the beginning of the third quarter, the report shows.

In addition, as of September 17, the current one-year forward weighted average price-to-earnings-ratio (P/E) for the Russell Emerging Markets Index is 17.9 as compared to a 21.9 P/E for the Russell Global Developed Index. This widens the gap from January 2, 2013, when the P/E ratios for these two indexes were 17.5 and 18.0, respectively.

"China has been a major contributor to the performance of the Russell Emerging Markets Index in recent months, due to its size within the index and its strong influence on investor confidence in the region,” says Gustavo Galindo, emerging markets portfolio manager at Russell Investments. “As investors appear to have adjusted to the prospect of slowing growth and negative news on China has ebbed, Chinese equities have benefitted.

“A better China picture, improving fundamentals and attractive valuations relative to developed global markets help underscore the continued important role emerging markets can play as part of a broadly diversified global multi-asset portfolio,” he adds.

 Russell Indexes Performance

Index

 

2013 YTD as of  Sept 17

 

3rd Qtr. As Of  Sept 17

 

Month-To-Date as of Sept 17

Russell Emerging Markets Index

 

-2.4%

 

4.5%

 

6.4%

Russell Global Developed Index

 

17.3%

 

5.9%

 

4.0%

Russell Emerging Markets Index Country Constituent

 

 

 

 

 

 

UAE

 

51.6%

 

6.9%

 

0.8%

Brazil

 

-13.1%

 

4.4%

 

10.5%

Chile

 

-14.7%

 

-6.5%

 

5.2%

China

 

5.6%

 

12.4%

 

5.8%

Columbia

 

-8.7%

 

7.1%

 

2.2%

Greece

 

6.1%

 

18.8%

 

13.2%

Indonesia

 

-13.0%

 

-21.4%

 

2.9%

India

 

-16.3%

 

-7.7%

 

8.9%

Korea

 

-0.7%

 

10.8%

 

5.2%

Mexico

 

-2.6%

 

0.9%

 

5.5%

Malaysia

 

1.7%

 

-5.2%

 

2.8%

Philippines

 

-0.2%

 

-5.9%

 

5.1%

Poland

 

-0.4%

 

13.3%

 

2.1%

Russia

 

-1.6%

 

11.7%

 

10.1%

Thailand

 

2.2%

 

-4.0%

 

12.7%

Turkey

 

-13.0%

 

-8.0%

 

13.0%

Taiwan

 

6.9%

 

3.1%

 

2.8%

South Africa

 

-4.5%

 

9.2%

 

9.2%

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