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Westpac: Q3 CPI Is A Potential Gamechanger


IRZ1 Lifted


(Z1) Off Lows, But Remains Weak


A Flat Restart

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  • In this chart, we rank the 16 EM equity markets (15 countries + EM index - MXEF Index) from 'cheapest' to the most 'expensive' ones based on the Price-to-Book, Price-to-Sales and Price-to-Earnings ratios.
  • To compute the score of each EM equity markets, we simply add the rank each time; hence, the lowest score that a EM country can have is 3 (the cheapest) and the highest score is 48 (most expensive).
  • As expected, Turkish equities still appear the cheapest according to our scoring model (lowest score of 3) as TRY weakness due to dovish CBRT and political uncertainty have been weighing on Turkish risky assets. TRY has been the weakest EM FX performer in 2021, down 15.7% against the US Dollar. With CBRT cutting rates, TRY could continue to depreciate in the near to medium term, therefore weighing on Turkish equities.
  • South Korea is also 'cheap' relative to other EM equity markets even though Korea equities have been trading at new all-time highs recently.
  • Russian equities also appear 'cheap' even though IMOEX index is currently trading at an all-time high. Rising oil prices in the short term could continue to support RUB and therefore levitate Russian equities to new record highs.
  • On the other hand, Czech equities, which are currently trading at a 13-year high, mostly driven by 'hawkish' CNB and broad CZK strength, appear 'expensive' according to our scoring model.
  • Indian equities remain the most expensive market, with current price-to-book and PE ratios of 4 and 30.51, respectively (vs. 1.85 and 15.56 for the EM MSCI index).

Source: Bloomberg/MNI