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.
“The central bank (CBR) indicated clearly at last month’s meeting that it would not rule out rate hikes if the ruble falls further. But if we are right that oil prices and the ruble should stabilise, this may allow the CBR to restart its easing cycle later in the year. Even so, any rate cuts would still be small – we have pencilled in 100bp of cuts in the one-week repo rate for 2016. In short, we expect monetary policy to be tighter than what markets are currently pricing in,” adds Capital Economics in the note posted by Barron’s.
Market Vectors Russia ETF