Nevertheless, more intrepid investors may target some of the cheapest emerging markets. For instance, Russia is currently the cheapest on absolute terms, with a forward P/E ratio for the MSCI Russia Index at 4.9, compared to its 5-year average of 5.2, according to Capital Economics.
Emerging markets have been pummeled in recent weeks on the weakening outlook for growth and currencies, notably as China’s economy shows signs of slowing down. Additionally, developing markets are also bracing for the eventual Federal Reserve interest rate hike, which could cause greater outflows from the riskier emerging markets.
Investors should look at the emerging market equities as a more cyclical asset. Currently, after years of out-performance in the developed markets, the emerging markets are beginning to show a lower premium to more developed countries. [Look to Emerging Market ETFs in the Second Half]
Market Vectors Russia ETF