Let's debate

  1. Which equity markets deserve a higher premium - Emerging markets or Developed markets? Valuation of Developed vs. Emerging Markets is a much debated point amongst analysts with strong arguments on both sides. Those in the “Developed” camp point to the depth and stability offered by these markets. On the other hand, proponents for Emerging Markets (EMs) point to the future potential and high growth of companies in these countries to make their case for higher valuations for EMs. What do you think?

I believe this is covered in Level 3.

thanks sir.Can you please tell me in which book of level 3 this topic is discussed???I am preparing for a debate on this topic…

check last year’s curriculum. Emerging markets i think has been dropped this year.

The two EM centric readings were removed. One, Dreaming with Brics: The path to 2050 is GS piece that I believe is available online. Important disclaimer: It is already 10 years old, which is why it was probably removed in the first place.

Most of that article is no longer relevant.

Thanks for all the help.I have borrowed CFAL3 2013 books from my friend.I think this topic is present in schweser book 2 for level 3.

Although i am a bit disappointed as very few write ups about this topic (Emerging market premium vs Developed market premium)are present in CFA/FRM curriculum.

It will be really helpful if some one can advice me about what points to discuss when i debate on this topic next Friday.

Thanks in advance.

Don’t be too theoretical. Theory doesn’t hold in the real world. The events in 2008 were a one in a billion year event.

The last time we had a crisis that bad, we were all just single-celled organisms. We hadn’t even invented double-entry accounting systems yet.

Didnt they say the same thing in 1996?


And 1998 with LTCM.

The brains behind that operation where academic geniuses.

Maybe we shoud add a risk premium to everything. We can call it, “In Case $#%&”. But yes Emerging Markets should have a higher risk premium. Higher risk of hyperinflation, higher relative corruption, lower accounting standards, less liquidity, etc.

There should also be a Putin risk premium. You never know what he can pull off.