Analyst Who Saw China Rout Says Emerging Stocks No Lure Yet
- Emerging stocks cheapest vs developed peers since 2004
- Sliding commodity prices mean EM stocks have further to fall
Emerging-market equities aren’t the bargain they appear to be, even after valuations fell to an 11-year low relative to their developed peers, according to John-Paul Smith, who has been warning of a China-led selloff for more than a year.
“Sometimes cheap isn’t enough,” said Smith, an ex-Deutsche Bank AG strategist who now works at Ecstrat in London and also predicted the Russian debt crisis in 1998. “The recent massive falls in commodity prices” are set to weigh further on emerging-market companies’ return-on-equity and Smith shifted to a more agnostic view on market direction in the near term, according to a note published on Aug. 25.