Russia in favour thanks to cheap valuations

HSBC's Nick Timberlake believes there are strong pockets of opportunity in emerging markets including Russia which spent most of 2010 out of favour with global investors.

Emerging markets will continue to take centre stage in 2011. Although a recent rally means valuations have reached normal levels, we think they are still inexpensive in the medium term. The asset class is currently trading below its two decade forward price earnings ratio average, and is significantly below its 2007 high on a price-to-book basis. Furthermore, emerging markets continue to trade at a discount to developed markets, despite featuring stronger growth prospects, lower debt levels, favourable demographics, robust banking systems and an abundance of natural resources. Alth...