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Emerging Markets Reach Parity With Developed Markets

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by Felix Salmon
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Jul 05 2007 12:00am EDT

Emerging Markets Reach Parity With Developed Markets

Helen Thomas, over at Alphaville, picks up on a piece of research by Dresdner Kleinwort’s James Montier. The key datapoint? Emerging-market equities are now trading at the same multiple as developed markets, and "as far as he can remember, that didn’t even happen during the last great emerging market boom of the early 1990s." Check out the Alphaville post for the chart.

I'd be much more worried about this if someone could explain to me why emerging-market equities should trade at a lower multiple than developed markets. After all, they generally have much higher growth rates, which would tend to imply perhaps that they should trade at a higher multiple. And big emerging-market companies today have no more difficulty raising money internationally than their developed-market competitors.

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