Developing markets took the brunt of the global selling pressure, but the weakness may have open opportunities for bargain hunters as some of the cheapest exchange traded funds track the emerging markets.
For instance, the Market Vectors Russia ETF (NYSEArca: RSX) shows a 6.99 price-to-earnings ratio and SPDR S&P Russia ETF (NYSEArca: RBL) is trading at a 6.04 P/E, according to Morningstar data. Russia is heavily exposed to oil prices, which has dragged on Russian equities, but if an investor believes energy prices could rebound, the emerging market could stage a decent rally.
Nigeria, another developing economy tied to oil, has also been weakening along with the fall in the commodities market. The selling has also dragged on valuations, with the Global X Nigeria Index ETF (NYSArca: NGE) showing a 6.85 P/E.
Investors may also find a bargain in Pakistan’s market through the Global X MSCI Pakistan ETF (NYSEArca: PAK), which has a 8.07 P/E.
Investors who are wary of putting all their eggs in a single basket may also turn to broader emerging market plays that are also trading at relatively cheap valuations.
For instance, the Schwab Fundamental Emerging Markets Large Company ETF (FNDE) has a 8.46 P/E, Global X SuperDividend Emerging Markets ETF (NYSEArca: SDEM) trades at a 8.09 P/E and First Trust Emerging markets Small Cap AlphaDEX Fund (NYSEArca: FEMS) shows a 8.93 P/E. In contrast, the S&P 500 is trading at around a 18.5 P/E.