The table below presents the current and historical equity market valuations for selected emerging markets. As of January 1, 2026, the trailing Price-to-Earnings (P/E) ratio of the MSCI Emerging Markets Index stands at 16.98, while the forward P/E ratio is 13.44.

Emerging markets have experienced a significant increase in valuations between 2022 and 2025 as investor confidence returned to regions like Hong Kong and South Korea. During the recent years, India has clearly been the most expensive stock market among emerging countries but it’s multiples have stayed flat while other markets have become considerable more expensive. Mainland China and South Korea saw a rapid spike in multiples during the latter half of 2025. Despite these higher price tags, low forward P/E ratios across the board (except for India) suggest that analysts expect a surge in corporate earnings to justify these valuations throughout 2026.

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Emerging Markets Valuations: P/E Ratios (Trailing & Forward)

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Equity Valuations in Emerging Markets: Current Trends & Historical Perspective

Emerging markets have historically traded at lower equity valuation multiples compared to developed markets, reflecting higher economic and political risks, currency volatility, and less mature financial systems. For many decades, this has provided a powerful narrative for investing in emerging equity markets: as the economic and political landscape become more mature, both the earnings and valuation multiples of companies should rise. This would make emerging markets a more attractive alternative to place your capital compared to developed markets.

However, things have not really played out as expected by emerging markets advocates. As of 2025, the earnings multiples for emerging markets remain below those of developed markets and developed markets, especially the U.S. equity market, keep outperforming less developed counterparts.

Historical Valuation Trends in Emerging Markets

Historically, emerging market equity valuations have experienced significant fluctuations, influenced by global economic cycles, capital flows, and regional crises. Some key trends include:

• Early 2000s Boom: During the early 2000s, emerging markets saw strong growth, driven by China’s economic expansion, rising commodity prices, and increased foreign direct investment. P/E ratios surged, reflecting investor optimism.
• 2008 Financial Crisis: The global financial crisis led to a sharp decline in emerging market valuations, with many indices experiencing steep losses as capital fled to safer assets. However, the recovery was relatively swift, supported by strong growth in countries like China, India, and Brazil.
• 2010s Moderation: Between 2010 and 2020, valuation multiples in emerging markets remained lower than in developed markets. This was partly due to slowing economic growth in major markets like China, geopolitical tensions, and weaker corporate earnings.
• COVID-19 and Recovery: The pandemic in 2020 initially caused a deep valuation drop across emerging markets, but many economies rebounded quickly due to strong fiscal stimulus and rapid digital transformation. The recovery, however, was uneven across regions.

Emerging Market Valuations in 2026

The broad story for emerging markets between 2022 and 2025 is one of significant valuation expansion, with the aggregate Emerging Markets Index trailing P/E rising from a low of 12.18 to nearly 17 by the end of 2025. This indicates that investors have become increasingly willing to pay more for every dollar of earnings in these regions, shifting the perception of the asset class from a deep-value play to a more growth-oriented investment. Interestingly, the Forward P/E of 13.44 at the end of 2025 is notably lower than the trailing figure, which suggests that the market is pricing in strong earnings growth for 2026.

The most dramatic shift occurred in Greater China. Hong Kong’s market saw its trailing multiple more than double, jumping from a heavily depressed 8.05 in 2022 to over 17.00 by late 2025. Mainland China followed a similar trajectory, particularly in the second half of 2025, when its P/E expanded from 14.80 to 18.06 in just six months. This rapid re-rating reflects a massive return of confidence, likely fueled by late-year policy shifts and the emergence of new growth drivers in the domestic tech and AI sectors, moving the market away from the “cheap” valuations that defined the previous few years.

Taiwan and India stand out as the premium-priced markets in the region, consistently trading at the highest multiples. Taiwan’s valuation peaked near 23 in late 2025, largely driven by its dominance in the global semiconductor supply chain. Investors are willing to pay a high premium there because of the sector’s high margins and essential role in the AI cycle. India, meanwhile, remained remarkably stable at high valuations throughout the entire three-year period, with its P/E rarely dipping below 21. This stability indicates a “growth premium,” where investors consistently value India’s domestic consumption story and demographic advantages more highly than the cyclical commodity-driven stories found in other emerging markets.

South Korea and Brazil represent markets that were historically undervalued but began to close the gap in 2025. South Korea’s trailing P/E climbed from under 10 in 2022 to over 17 by the end of 2025, marking a significant departure from the traditional Korea Discount. However, its Forward P/E of 10.64 is the lowest among the major Asian economies, suggesting that while prices have risen, analysts expect a massive surge in earnings for 2026 that will bring valuations back down to Earth. Brazil also saw its multiple double from 5.69 to 11.45, reflecting a recovery in commodity prices and a more favorable interest rate environment, though it remains one of the more “affordable” markets on a relative basis.

Finally, the data for Russia highlights a complete withdrawal from global valuation metrics, with reporting stopping after mid-2024. Prior to that, it traded at extremely low “distressed” multiples between 3 and 4. In contrast, South Africa saw a steady and healthy expansion, with its valuation nearly doubling over the period as it benefited from the broader shift in capital toward emerging markets. Across nearly all these countries, the gap between Trailing and Forward P/E at the end of 2025 remains wide, signaling that the entire asset class is entering 2026 with high expectations for a fundamental earnings recovery to justify these new, higher price tags.