Markets are still extremely volatile, but they actually present some very excellent buying opportunities. Today, I topped up into emerging markets, because huge outflows from emerging market equities since 2008 have pointed to a possible indication to buy emerging market equities at their lowest valuations in 2.5 years. Valuations are now 30% below the 20 year average, as shown by data compiled by Morgan Stanley and Bloomberg.
In the past decade, the MSCI Emerging Markets Index went up by an average of 17% in six months after outflows of this magnitude. Out of 12 occasions, 11 gained, according to EPFR Global and Bloomberg.
The current market problems actually stem from the developed countries. Emerging markets do not share the same problems. Growth is still quite strong, and demographics, a very important point for investing in emerging markets, will continue to be a significant driver of growth.
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