• Firms on MSCI gauge seen earning $71.30/shr in next 12 months
  • EPS forecasts gained from commodity rebound, Commerzbank says

The prospects for corporate profits in emerging markets are getting their biggest lift in more than five years.

Analysts boosted their average earnings estimate for developing-nation companies by $1.63 a share last week, the most since the start of 2011, according to data compiled by Bloomberg for the 835 companies in the MSCI Emerging Markets Index. A rebound in the prices of oil and other commodities is behind the newfound optimism, Simon Quijano-Evans of Commerzbank AG said.

“This increase in earnings expectations is highly correlated with oil prices and commodities prices,” said Quijano-Evans, the London-based chief emerging-markets strategist at the German bank. “Whether it is sustainable is a question that depends on whether the oil-price stability is sustainable. Fundamentally, nothing has changed for emerging markets. The growth picture remains the same for the next six to 12 months.”

Earnings projections for the next 12 months have risen to $71.30 a share. While that’s up from a low of $67.72 in January, it’s still 37 percent below a peak reached in July 2011 after Federal Reserve stimulus boosted demand for riskier assets. Since then, sputtering economies from China to Brazil and a three-year decline in oil prices cast a shadow over the outlook. Currency devaluations also hurt earnings prospects in dollars.

The MSCI gauge entered a bull market last week as Brent crude extended this year’s rebound amid signs a glut was easing. At the same time, the Fed scaled back expectations for interest-rate increases adding to the supportive stance of central banks in Europe and Asia.

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