Commentary: Why an emerging markets ex-China strategy offers a new opportunity set

South Africa was almost 15% of the MSCI Emerging Markets index in 2002. In 2015, the weight dropped to 6.8%. Today, its share has fallen to 3.2%. Similarly, other markets such as Mexico, Malaysia, Chile, etc., have experienced similar diminishing shares. What this means is that there is the risk of missing out on the attractive valuation opportunities these markets offer (see Figure 2) .

Based on price-to-book ratios over the last 10 years, markets such as Indonesia, Malaysia, Philippines, Mexico, South Africa, Turkey and Chile are trading at very attractive levels. At current valuations, these markets will likely offer plenty of investment options.

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