In focus

Schroders Emerging Markets Lens November 2022: your go-to guide to emerging markets

Our latest edition of the Schroders Emerging Markets Lens is now available. 

This consists of separate emerging market (EM) equity and debt chartbooks/presentations, packed full of data and insights to help you navigate the world of emerging markets. The aim here is to provide an unbiased top-down view of markets, with the main focus on EM valuations.

Below is a summary of key developments in the equity and debt markets and you can find the links to both presentations here:

Emerging Markets Lens: Equity

Emerging Markets Lens: Emerging Market Debt

Summary of emerging market equities:

  • Emerging market (EM) equities fell -3% in October, underperforming developed markets (DM) by 10%. However, this was primarily due to weakness in China and Taiwan.
  • Chinese equities corrected as the 20th National People’s Congress reinforced President Xi’s authority and did not indicate any near term end to the Zero-Covid policy. New US export controls on semiconductor manufacturers, which will restrict Chinese companies access to advanced chips, also weighed on sentiment.
  • Year-to-date, commodity-producing Latin American and Middle Eastern markets have been the top performers. China is the weakest index market while several Eastern European markets are also sharply lower.
  • EM equities as a whole are undervalued on both a forward price-earnings and price-book basis when compared with the historical median. On a dividend yield basis, EM has reached a post-GFC high. Aggregate earnings expectations have continued to fall though, with further downside likely in the coming months. 
  • There remains considerable variability between sector valuations in EM. Growth sectors in general remain much more expensive than value sectors. EM equites are cheaper than developed market (DM) equities, but the difference is not extremely large, especially on a sector neutral basis.
  • Valuations in Asia have become more attractive in some markets. Latin America remains the cheapest region.
  • A decade of US dollar appreciation has weighed on EM equity returns. Most EM currencies have depreciated in real terms, implying emerging value, although the extent varies significantly.

Standardised EM country valuations: Combined

Average (P/E, P/B, dividend yield) (z-score1)


1The z-score is a measure of how far valuations are from historical mean, calculated since January 2000. Excludes UAE, Qatar, Saudi Arabia and Kuwait due to limited data history.

Source: Schroders, Refinitiv Datastream, MSCI, IBES, Schroders Strategic Research Unit. Data as at 31 October  2022.

*These figures are for illustrative purposes only and are not to be taken as a recommendation to buy, sell, or hold. Past performance is not a reliable indicator of future performance and may not repeat.

Summary of emerging market debt:

Hard currency emerging market debt (EMD):

  • The hard currency sovereign EMD index yield hit 9.7% at the end of October and remains at its highest level since the GFC. This has been driven by a combination of higher credit spreads and higher treasury yields.
  • The spreads of the investment grade (IG) sovereign and IG corporate indices are close to their historical median.
  • The spread of the HY sovereign index is still close to its GFC peak. The high yield (HY) corporate index spread is also elevated. 

Local currency EMD:

  • The local currency EM index yield has increased markedly in 2022, reaching 7.4% at the end of October.
    • But the real yield pickup over developed market (DM) bonds has collapsed towards the bottom end of its post-GFC range. This is because of the sharp decrease in EM real yields this year, as inflation has increased by more than nominal yields.
    • There are undervalued currencies in all three EM regions. On average, Latin American currencies are the cheapest, whereas Asian currencies have the least appealing value.

Local currency EMD index yield


Source: Schroders, Refinitiv Datastream. Data as at 4 November 2022. Russia was removed from all JP Morgan EMD indices from 31 March 2022.   

*These figures are for illustrative purposes only and are not to be taken as a recommendation to buy, sell, or hold. Past performance is not a reliable indicator of future performance and may not repeat.

Learn more about investing in Schroders Global Emerging Markets Fund

Schroder Global Emerging Markets Fund - Institution

Schroder Global Emerging Markets Fund – Advisers


Important Information:
This material has been issued by Schroder Investment Management Australia Limited (ABN 22 000 443 274, AFSL 226473) (Schroders) for information purposes only. It is intended solely for professional investors and financial advisers and is not suitable for distribution to retail clients. The views and opinions contained herein are those of the authors as at the date of publication and are subject to change due to market and other conditions. Such views and opinions may not necessarily represent those expressed or reflected in other Schroders communications, strategies or funds. The information contained is general information only and does not take into account your objectives, financial situation or needs. Schroders does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this material. Except insofar as liability under any statute cannot be excluded, Schroders and its directors, employees, consultants or any company in the Schroders Group do not accept any liability (whether arising in contract, in tort or negligence or otherwise) for any error or omission in this material or for any resulting loss or damage (whether direct, indirect, consequential or otherwise) suffered by the recipient of this material or any other person. This material is not intended to provide, and should not be relied on for, accounting, legal or tax advice. Any references to securities, sectors, regions and/or countries are for illustrative purposes only. You should note that past performance is not a reliable indicator of future performance. Schroders may record and monitor telephone calls for security, training and compliance purposes.