November 29, 2018
The Big Picture: What history reveals about Emerging Markets
EM markets have recently traded at a 1.5 standard deviation below their five-year average trailing Price/Earnings ratio. Historically, when stocks have been this oversold, it has signalled the beginning of a rebound. For example, the last time the MSCI EM Index was at this level was in late-September 2015. It rallied more than 21% in U.S. dollar terms (18% CAD) over the next twelve months. Will historical trends hold?
Source: Bloomberg, as of October 24, 2018