Markets

Emerging markets may swing 20%

By Shiyin Chen and Haslinda Amin (China Daily)
Updated: 2010-03-17 10:14

SINGAPORE - Antoine van Agtmael, who coined the term "emerging markets", said equities in developing nations are fairly valued and need a "breather" after last year's record rally.

Shares in emerging markets could decline or increase as much as 20 percent this year, van Agtmael, who helps manage $13 billion as chairman and chief investment officer of Emerging Markets Management LLC, said. Stocks aren't cheap at levels comparable to developed markets, he also said.

"We have just had the best gains in the history of emerging markets, we need a bit of a breather," van Agtmael said. "It's not going to be the panic of 2008 and it is not going to be the fabulous year we had last year."

Van Agtmael said smaller companies within developing nations may be among the best investments after the MSCI Emerging Markets Index retreated 0.6 percent this year, following a record 75 percent gain in 2009.

The MSCI index of 22 developing nations is in the "fair value range", trading at 12.8 times estimated earnings for 2010, compared with its four-year average of 12.1 times and a multiple of 14.9 times for the MSCI World Index, tracking developed nations. A gauge of smaller companies within emerging markets trade at a multiple of 6.2 times even after more than doubling in 2009.

"Small stocks in big countries showed last year that they were very attractive," he said. "These are new areas that people are going to pay attention to in the future."

Brazil, India and China, whose stock markets rallied at least 80 percent last year, are not going to among the best performers this year, van Agtmael said.

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