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Valuations set stage for outperformance of EM equities

Emerging market (EM) equities fared poorly in 2015, with the MSCI Emerging Markets Index falling by 8% in local currency terms and lagging behind the MSCI World Index of developed market equities for the third year running. However, this has left the relative valuation of EM equities looking increasingly attractive, supporting our view that this EM underperformance is finally set to reverse in 2016-17.

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