8 EM Equities
Will the EM Giants Awaken?
Disappearing Growth Premium Earnings Growth Premium Gone
500
7.0% r 16° Peak EM Earnings
6.0% -1 140
5.0% -, 400
120
4.0% — — ----- f 100
300 Peak U.S.
3.0% •
80 Earnings
2.0% 1il t
200
0
1 r% 111110 IIIIII ‘,40
-1.0% • pa 100
-2.0%
0
-3.0%
4003 1005 2006 3007 4008 1010 2011 3012 4013 1Q15
-100
Average EM Growth Premium (LHS)
-200
---- (AVG) Average EM Growth Premium (LHS) '96 '97 '98 '99 DO '01 '02 '03 D4 '05 '06 '07 D8 '09 '10 '1 '12 '13 '14 '15
MSCI EM (local) - S&P 500 Index (RHS) - (INDEX) S&P 500 EPS (LTM) ua MSCI EM USD PM. • S&P 500 Price)
— (INDEX) MSCI EM EPS (LTM)
Emerging market equities have benefitted from Emerging markets experienced several years
superior economic growth over the developed of an earnings growth premium over the U.S.
markets in recent years. However, the collapse in commodity prices
However, that growth premium has been and lackluster economic growth in EM has
eliminated and has resulted in emerging market resulted in the earnings growth premium
equities lagging developed market equities. collapsing.
As a result, the U.S. has been outperforming
the emerging markets.
Footnotes: Data as of 3O15. Foolnotes: Data as of Deconber 31. 2015
Booms: Bloomberg Finance LP, FabtSet, Detilsche Rank Wealth Managernerd Sourte FactSet, Clealsche Sank Wealth Management
Deutsche Bank
Wealth Mana0ement 22
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