EMERGING MARKET FLOWS WENT NEGATIVE IN 2015 (quindi?)

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MA

Historically, when EM flows go negative, Emerging Markets moved 40%, 64%,­11%, 59%, 11%, 74% the following year. China? 1500% in 3 years. 

“This ratio is now below the troughs witnessed during the global financial crisis and has only been lower twice in the past 20 years: fleetingly after September 11, 2001 and more tellingly during the 1997­98 Asian financial crises.

 Emerging markets have only been this cheap 3 per cent of the time since 1989. 

Now is not the time to become more negative on the asset class,” says Richard Titherington, chief investment officer, emerging markets and Asia Pacific equities, at JPMorgan AM. “Sentiment is extremely bearish, approaching levels seen in the depths of previous crises. Three decades of investment experience in emerging markets teaches that panic selling always creates opportunities.” PMAM went on to analyse the returns investors who bought in at similarly low price/book ratios enjoyed over the subsequent 12 months. 

In every case during the past 20 years they have made money, often as much as 50­60 per cent (see the second chart). Indeed, JPMAM calculates the average 12­month return banked by those who bought into the MSCI Emerging Markets at a p/b ratio of 1.3 has been 49 per cent. For the MSCI Asia Pacific ex­Japan index, this figure rises to 64 per cent. Number crunching from Credit Suisse based on these episodes shows, once the p/b ratio has fallen to 1.3, it has always been lower still both one month and three months later, although investors have always made money on a two­year view. Despite these wrinkles, it describes Asian equity valuations as “really quite compelling”. 

IL MESSAGGIO SEMBRA PIUTTOSTO CHIARO, O NO?