EM equities are only 40% lower than high levels of October 2007

Markets are more than 90% higher than the low levels seen in March this year, which almost re-tested the lows of October 2008.

On the flipside emerging markets are still only 40% off its highs of October 2007. So where now? Emerging market equities were oversold in the fourth quarter 2008 as much as they were overbought the year previous. In 2007, unrealistic earnings upgrades were hard pushed to justify increasingly stretched valuations. In 2008, the good were thrown out with the bad as swathes of the asset class suffered a reckless de-rating spiral, virtually regardless of fundamentals. The October and February lows now look like a spectacular overreaction to what was, admittedly, unprecedented uncertainty at ...