• Russia Also Displayed Significant Government Involvement: Russia’s socialist and communist history has led to noteworthy government ownership in the Energy and Financials sectors. Although the recent Ukrainian conflicts have further depressed valuations, the Russian Energy sector had already displayed depressed valuations compared to the broader emerging markets before the crisis. For example, Gazprom and Rosneft, two of the largest state-owned energy companies, have dividend yields north of 5% and P/E ratios under 5x.3
WisdomTree Emerging Markets Ex State Owned Enterprises Index
WisdomTree created a broad-based Index to emerging market stocks that are not state-owned enterprises; this Index will help investors monitor the performance of this subset. In a future blog post, we will introduce this new Index, the WisdomTree Emerging Markets Ex State Owned Enterprises (EMXSOE), designed to measure the performance of broad-based emerging market stocks that exclude state-owned companies.
1Sources: WisdomTree, Standard and Poor’s, as of 7/31/14.
2Sources: WisdomTree, Bloomberg; refers to the five largest dividend-paying Chinese banks as of 9/30/14.
3Sources: WisdomTree, Bloomberg, as of 9/30/14. The WisdomTree Emerging Markets Ex State Owned Enterprises Index does not hold Gazprom or Rosneft.
Important Risks Related to this Article
Investments in emerging, offshore or frontier markets are generally less liquid and less efficient than investments in developed markets and are subject to additional risks, such as risks of adverse governmental regulation and intervention or political developments.