Emerging market shares gain ground on economic firming and an improved earnings environment

Despite improved performance, valuations are cheap relative to the developed world

Cao_Steve_sm_150dpi_RGBEmerging markets delivered strong performance in the second quarter, driven by improved economic conditions and stabilized corporate earnings.1 The macro-level strengthening included lower inflation, stable commodity prices, improved current account balances and a reversal in currency depreciation. Assuming an accommodative monetary backdrop, emerging market gross domestic product (GDP) is expected to grow by roughly 4% this year and to accelerate in 2017 — the first acceleration in four years.2