Our India team is quite confident of more flows coming into India given its position compared to others in the EM space
. We strongly feel that at this point in time, Indian markets are poised to deliver better returns than most of its emerging market peers as it is still below its long term valuations in terms of P/E ratios and P/B ratios.
Nevertheless, the need to differentiate between countries within the EM space
has become crucially important and we believe that investors should focus on those nations which boast fiscal and current account surpluses and are commodity consumers, rather than producers.
With one of the largest current-account deficits in the EM space
- and a history of large portfolio inflows (bonds, in particular) - ZAR may weaken further should concerns about the provision of global liquidity intensify and investors further scale down their positions in EM assets.
Current economic setup forced investors to concentrate on developed market equities, cutting position in EM space
. However, we see reversal of this trend based on many factors.
An em space
(or em dash) is wider than an en space (or en dash) because m takes up more room than n.
In the EM space
there was no rout either: Indonesian sovereigns actually tightened, while Russia, Turkey, Brazil were marginally unchanged over the week.