EM Growth? TABLE 1 highlights data from the 10 largest emerging mar- CAPE ratios are lower outside the U.S., with emerging mar- kets, which account for 89.2% of the MSCI Emerging Mar- kets even lower than those in developed markets. While we kets Index, Ths growth preipeets of this group appear sur- have been more constructive in recent issues of Global Fore- _Prisingly tepid. The median real GDP growth for the next : 5 : . . sight on non-U.S. opportunities, we believe there is limited rel- five years is forecasted at 2.5%, while population growth is re) “ : ”» evance of CAPE ratios when comparing the very deep, diverse expected to be less than 1.0%. The term “emerging markets set of companies in the U.S. with most other markets. While “#S coined in the 19s, malt frankly, ilogt of these ceono= valuation from 30,000 feet looks better in many places, there ™E€S have already “emerged. The counter ies with the most are reasons to discount CAPE asa reliable valuation tool when long-ter m economic gr owth potential are ar guably those analyzing smaller markets. As an extreme example, Russia has with young, growing P opulations—namely, India, Indone- the lowest CAPE ratio in the world, but its equity market is ae and Malaysia. However, these countries have small eq- very concentrated in commodity businesses whose earnings Wty maricets that, when combined, do not even equal South are highly cyclical. Koreas in size. TABLE 1: KEY DATA FROM THE TEN LARGEST EMERGING MARKETS rorecast ESTIMATED are INDEX LAST 5 YEAR POPULATION INFLATION FISCAL LEADING 10-YEAR SOVEREIGN COUNTRY WEIGHT GDP GROWTH mised le euly dle To RATE ceili DEBT/GDP MARKETP/E BOND YIELD DEBT RATING 2021 CHINA 277% 7.3% 6.4% 0.6% 2.0% 374 46.2% 13.6 3.5% AA- SOUTH KOREA 15.4% 2.8% 2.7% 0.4% 1.3% 41.2 38.6% 97 2.2% AA TAIWAN 12.2% 2.1% 2.2% 0.2% 1.4% 40.2 35.7% 13.8 1.0% AA INDIA 8.8% 6.3% 7.5% 1.3% 5.0% 27.6 69.5% 18.8 6.5% BBB SOUTH AFRICA 7.0% 1.6% 1.5% 1.6% 6.3% 26.8 50.5% 15.9 8.4% BBB- BRAZIL 6.7% -0.4% 1.