Have EM profits have reached their trough?

Lack of profitability among EM corporates has dragged the sector down in the last several years, but the poor performance has reached its trough and the only way is up, argues Emma Bullock from Saunderson House.

Up until the second quarter of this year, emerging market equities had lagged developed markets for three and a half years, resulting in cumulative underperformance of more than 50%.  This period of disappointing returns has run its course and there are many reasons to have a positive outlook for stock prices. Profits at a trough The primary reason for this poor performance was the worsening profitability of emerging market companies in absolute terms, but also relative to their developed market peers.  However, this deterioration in profitability seems to have troughed.  Operat...