Seventy-four percent of global investors surveyed by Bloomberg last month said the euro-area economy will fall into recession in the next 12 months. U.S. Federal Reserve Chairman Ben S. Bernanke said on Sept. 29 that the U.S. is facing a "national crisis" with a jobless rate at or above 9 percent since April 2009. German Finance Minister Wolfgang Schaeuble opposed moves yesterday to increase the scale of a euro rescue fund, damping speculation of a breakthrough in talks to quell the debt crisis.

"When there is clarity, when the authorities move and do something, emerging markets will be a fabulous place to invest," Biggs, the former chairman of Morgan Stanley Asset Management, said in a Sept. 22 interview on Bloomberg Television. "I am not ready to make that bet yet."

Emerging-market stocks trailed advanced-nation shares during times of financial stress that sparked global losses in the past two decades including Latin America's so-called Tequila Crisis in 1994 after a devaluation of the Mexican peso, Russia's 1998 default on $40 billion of debt and the 2008 crisis sparked by the bankruptcy of Lehman Brothers Holdings Inc. The peak-to- trough drop in the emerging-market index was 12 percentage points bigger on average during the six retreats, according to data compiled by Bloomberg.

"The likelihood that people continue to take money out of risky asset classes continues to be there," said Lee King Fuei, a fund manager at London-based Schroders Plc, which oversaw about $330 billion as of June 30. "In the shorter term, I don't see any particular catalyst that will reverse this."

A year ago, Harris Private Bank's Ablin told Bloomberg News that emerging-market shares were "stretched." Now the Chicago- based chief investment officer says valuations have fallen "back in line with reality" and investors should consider adding to holdings.

Japan Buying

TCW's Sri-Kumar advises buying in the consumer industries of India and Brazil, where the unemployment rate was 6 percent in August, a record low for the month. Mahendran, who helps oversee about $499 billion as the Singapore-based Asian head of investment strategy at HSBC Private Bank, favors Jiangsu Expressway Co., a Chinese toll-road operator, and China Mobile Ltd., the world's largest mobile-phone company by users.

Faster growth in emerging markets means investment returns will be higher, said Takahiro Mitani, president of Japan's Government Pension Investment Fund. The world's largest public pension fund, which oversees 114 trillion yen ($1.5 trillion), will start investing in emerging-market stocks by the end of the year, Mitani said in a Sept. 27 interview in Tokyo.

Emerging economies may expand 6.4 percent in 2011, four times quicker than the 1.6 percent rate for developed nations, the Washington-based International Monetary Fund forecast in September.

Developing-nation government debt will probably amount to 35 percent of emerging-market gross domestic product this year and budget deficits will be 2.7 percent, compared with levels of 102 percent and 6.8 percent in advanced nations, according to the fund's Fiscal Monitor in June.