Rousseff Intervention

Developing stocks also have lower valuations. The MSCI emerging gauge trades for 10 times analysts’ 12-month profit estimates, versus 13 times for the MSCI World, the widest gap since November 2008, according to data compiled by Bloomberg.

In the biggest emerging markets, government interference is eroding returns for minority shareholders. PetroChina, which dropped 6.7 percent in Hong Kong trading this year, posted annual earnings that trailed analysts’ estimates on March 21 as the government capped retail fuel and natural gas prices to contain inflation.

Brazil’s Rousseff has intervened to curb utility rates, bank lending margins, mobile-phone fees and fuel prices -- reducing earnings prospects for industries with a combined weighting of about 50 percent in the Bovespa index.

OAO MRSK Holding, a Moscow-based power distributor, tumbled 49 percent during the past 12 months as President Vladimir Putin delayed tariff increases and signed a decree to combine the company with state-run Federal Grid Co., instead of selling shares to private investors as some analysts had anticipated.

Fed Stimulus

“The risk of the emerging markets is that the institutional frameworks are still a work in progress,” said Rupal Bhansali, who helps oversee about $5 billion as a New York-based chief investment officer for international equities at Ariel Investments LLC.

Inflation is preventing central banks in emerging markets from stimulating their economies as much as developed nations, said Jason Hsu, the chief investment officer of Newport Beach, California-based Research Affiliates LLC.

Consumer prices in Brazil rose at the fastest pace since December 2011 in February, spurring speculation that the central bank will raise its benchmark interest rate this year. People’s Bank of China Governor Zhou Xiaochuan said at a March 13 press conference that policy makers should be on “high alert” over inflation, while India’s central bank said on March 19 that scope for further monetary easing is limited.

By contrast, the Federal Reserve maintained its $85 billion-a-month bond purchase program on March 20 and Bank of Japan Governor Haruhiko Kuroda vowed the next day to pursue “bold” monetary stimulus.