The MSCI emerging-market index's price-to-book ratio is 25 percent lower than its average of 2 during the past five years, according to data compiled by Bloomberg. The gauge trades at a 2.5 percent discount to the MSCI World Index, compared with a 17 percent premium a year ago.

Profits at companies in the emerging gauge jumped 23 percent on average in the second quarter, about three times faster than the 7.8 percent growth in MSCI World index earnings, the data show.

The MSCI Brazil Consumer Staples Index trades at 2.5 times book value, or assets minus liabilities, 19 percent less than its five-year average. Hypermarcas SA, the Sao Paulo-based maker of consumer products and medicines, tumbled 40 percent last quarter to the lowest level since April 2009.

The benchmark gauge for Indian makers of discretionary consumer products has retreated to 3.8 times book value from 6.4 times a year ago, data compiled by Bloomberg show. Tata Motors Ltd., the Mumbai-based maker of the world's cheapest car, tumbled 22 percent in the three months through September.

Brazil's central bank cut its benchmark Selic interest rate by 0.5 percentage point to 12 percent on Aug. 31 after raising borrowing costs eight times since April 2010. While the Reserve Bank of India increased interest rates on Sept. 16, traders of interest-rate swaps are pricing in the possibility of cuts in the next year.

One-year interest-rate swaps in India, which reflect the cost of receiving the overnight money-market rate, traded at 7.91 percent yesterday, below the 8.25 percent repurchase rate, according to data compiled by Bloomberg.

Nanjing-based Jiangsu Expressway's rising dividend yield lured HSBC's Mahendran, who accurately predicted emerging markets would "take a breather" in the first half. The company has payouts equivalent to 7.8 percent of its share price, more than double the 3 percent yield on the MSCI World index, according to data compiled by Bloomberg.

The stock, which fell 17 percent last quarter, may rally 54 percent in the next 12 months, according to the average of 13 analyst estimates compiled by Bloomberg.

China Mobile's dividend yield has climbed to 4.2 percent from an average 2.6 percent since 2003, data compiled by Bloomberg show. The Hong Kong-based company has about $50 billion of cash available to invest or return to shareholders, more than Apple Inc., the world's biggest technology company by market value, according to data compiled by Bloomberg.

"The fundamentals of the emerging-market economies are pretty strong," said Kelvin Tay, the Singapore-based chief investment strategist at UBS Wealth Management. "On a medium-to longer-term basis, the emerging-market space looks far better than advanced nations."

 

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