Strong EM performance is underpinned by sector's solid economic fundamentals

As 2008 rolled into 2009, global investors were still recovering from the most traumatic of years, felt most acutely perhaps in emerging markets.

Forecasts for market returns in 2009 ranged from cautious to disastrous as investors positioned for a deflationary environment not seen since the Great Depression. This now seems long ago, with the MSCI Emerging Markets Index returning nearly 60% in 2009, driven by huge stimulus packages globally, and most importantly the $600bn deployed in China. Decoupling had become a dirty word for many investors yet, certainly in economic terms, it became a reality with China delivering real GDP growth of above 8% for the year despite the severe slowdown in the West. Strong emerging market equity...