Emerging Markets Relatively Cheap and Austere

By on July 20, 2010

Prieur du Plessis, at Minyanville, contrasts the public debt/GDP ratios of supposedly mature (or developed) and several large emerging markets countries. The emerging markets appear to be more “mature” given the fact that they’ve kept a lid on government spending.

Click on graphic below for larger image:

Not only are emerging markets relatively attractive on a fiscal basis, they also appear enticing on a valuation basis:

SMA Comment: Jeremy Grantham has also been touting the relative attractiveness of emerging markets as an investment over the past several months. The rise of emerging markets off the March 2009 bottom has been spectacular (as another chart from du Plessis shows – not included here), but this outperformance has not necessarily made emerging markets expensive.

Source: Minyanville
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