Value Stocks In Emerging Markets Could Be Due A Rebound

Value Stocks In Emerging Markets Could Be Due A Rebound
Stéphane Renevier, CFA

about 3 years ago1 min

  • This chart compares the performance of cheap-looking “value” stocks to “growth” stocks – which exhibit high earnings growth – in emerging markets
  • A rising line indicates value stocks are performing better than growth stocks, and falling line the opposite
  • Growth stocks tend to outperform when economic and earnings growth is hard to find, while value stocks outperform when investors think things are looking up and there’s little chance of them getting worse
  • This chart shows that the best times for value stocks were after a crisis – like after the dotcom bubble burst in 2001 and the global financial crisis in 2009
  • Why should I care? If, like most economists, you think an economic recovery is due, emerging market value stocks should outperform growth stocks
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