Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Emerging Stocks Suffer as Earnings Gap Shrinks

Emerging-market companies have to become more profitable to draw the foreign investment needed to lift their shares, according to Pierre Lapointe, head of global strategy and research at Pavilion Global Markets Ltd.

The CHART OF THE DAY displays the differential between returns on capital -- equity and debt -- for companies in the MSCI Emerging Markets Index and those in the MSCI World Index, which tracks developed markets.

Returns on the emerging-market gauge came out ahead last year by as little as 0.7 percentage point, the narrowest spread since 2000, according to data compiled by Bloomberg. The gap as of yesterday was 1.1 points, well below a peak of 4.8 points in May 2002.

“The reward for taking more risk by investing in emerging markets is now minimal,” Lapointe, based in Montreal, and two colleagues wrote yesterday in a report with a comparable chart. Many foreign investors “are probably sticking with developed markets,” they added.

MSCI’s emerging-markets index, comprised of stocks from 21 countries, had a 2.2 percent loss for the year as of yesterday. The decline contrasted with a 6.8 percent gain for MSCI World, covering 24 developed markets. The emerging-market gauge has trailed since August 2011.

“What will it take for emerging markets to start outperforming again?” the report said. “They need to boost profitability.” Returns on capital in most emerging countries represented in the MSCI index have fallen since 2007, when the indicator set a record, data compiled by Bloomberg show.

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.