In focus

Schroders Emerging Markets Lens October 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 -11.4% in Q3, and underperformed developed markets (DM) by 5.3%.
  • China underperformed as real estate sector stress and a resurgence in Covid cases weighed on sentiment. Market sentiment in Eastern European EM was negatively impacted by escalation in Russia’s conflict in Ukraine. Conversely, Turkey was the best-performing index market, driven by non-fundamental factors, while Brazil and India also posted gains.
  • Year-to-date, commodity-producing Latin American and Middle Eastern markets have been the top performers. Eastern European markets are sharply lower, while EM Asia also lags the index.
  • EM equities as a whole are slightly 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.
  • 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. LatAm 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.
The following charts are for illustrative purposes only and are not to be taken as a recommendation to buy, hold or sell.

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 30 September 2022.

Summary of emerging market debt:

Hard currency emerging market debt (EMD):

  • The hard currency sovereign EMD index yield hit 9.6% at the end of September, 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 high yield (HY) sovereign index is well above the historical median, and sits close to its GFC peak. The HY corporate index spread is slightly above the historical median. 

Local currency EMD:

  • Local currency EM bond yields have increased markedly in 2022
  • The real yield pickup over developed market (DM) bonds has collapsed towards the bottom end of its post-GFC range.
  • 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

Hard currency sovereign EMD regional index yield


Russia was removed from all JP Morgan EMD indices from 31 March 2022. Source: Schroders, JP Morgan. Data as at 7 October 2022.


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.