iShares S&P India Nifty 50 Index Fund (INDY), Ishares Msci Turkey Inv Market Index Fd (TUR): Are Emerging Markets Cheap?

A surprise haven for income investors?
International equities aren’t often seen as strong dividend-payers. Because emerging markets are expected to achieve above-average growth, foreign stocks usually don’t provide a great deal in terms of yield.

After such considerable declines over the past several weeks, however, many international indexes now provide compelling yields.

In particular, the Thailand and China Large-Cap funds now offer yields in excess of the comparable yield on the S&P 500. Whereas the U.S. stock market yields roughly 2%, the Thailand fund yields 2.4%, and the China Large-Cap fund yields 2.8%.

This means that investors still reluctant to invest across the globe are presented with an additional layer of downside protection in the form of strong yields.

Global markets are an emerging opportunity
The emerging markets are now notably cheaper than the S&P 500. Of course, global economies are inherently less stable than the U.S. and should therefore trade more cheaply than American stocks.

At the same time, global stock markets are now beyond reasonable discounts to domestic indexes. In addition, growth in the emerging markets is likely to lead global economic growth in the years ahead. Specifically, emerging-market growth is expected to be much stronger than in the U.S.

Geopolitical tensions come and go, and we’ve seen times of enhanced headline risk several times in just the past few years. That hasn’t stopped the engine of economic growth from barreling full-speed ahead in the emerging markets.

As a result, savvy investors who don’t mind the heightened risk of international investing should consider these markets for investment opportunities.

The article Are Emerging Markets Cheap? originally appeared on Fool.com and is written by Robert Ciura.

Robert Ciura has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 

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