In this video, Jean-Christophe "JC" de Beaulieu CFA, managing director and head of active emerging-market equities at State Street Global Advisors, argues that the recent selldown in the asset class should now lead to a renewed earnings boost.
The quality of many emerging-market companies' fundamentals has declined, but so has their cost of equity. With returns on equity having reached a trough, there is scope for an improvement. The obstacle for many companies will be the leverage they have accrued over the past few years – but at interest rates so low, that they only need a modest earnings expansion to reward investors.
The gradual slowing of the Chinese economy is having ripple effects on emerging market stocks globally, and De Beaulieu explains what sectors and countries are most affected.