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 Emerging Markets (an index representing all emerging markets) stands at 18.36, while the forward P/E ratio is 11.61.

Emerging market equities experienced a large increase in valuations between 2023 and 2026, but the multiple expansion has varied widely across countries. South Korea and Taiwan have benefited from the global AI infrastructure boom, which drove both earnings and valuation multiples sharply higher for semiconductor-related companies. In South Korea, the gap between the trailing P/E ratio (22.95) and the forward P/E ratio (7.82) reflects analysts’ expectations of continued extraordinary earnings growth. China has followed a different path, with valuation multiples recovering despite largely stagnant corporate earnings, while Hong Kong-listed stocks continue to trade at low valuations.

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

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 Markets Valuations in 2026

Emerging market equities experienced a strong increase in valuation multiples during the recent years, although this has been far from uniform across countries. After several years of subdued valuations, improving investor sentiment, easing inflation, and expectations of lower interest rates supported higher equity prices across many emerging markets.

South Korea and Taiwan have been the best performers, almost entirely due to the global AI infrastructure boom. The rapid growth in demand for advanced semiconductors, memory chips, and related hardware has led to exceptional earnings growth for companies supplying AI data centers and infrastructure. In South Korea, the contrast between the trailing P/E ratio of 22.95 and the forward P/E ratio of just 7.82 well illustrates the market’s expectation that earnings for AI-related companies will continue to grow at an extraordinary pace over the coming year.

China presents a very different picture. Valuation multiples have recovered from the extremely depressed levels seen in 2022–2023, despite corporate earnings remaining largely stagnant. The improvement has therefore been driven more by a recovery in investor sentiment than by stronger fundamentals. Even after this rebound, Hong Kong-listed Chinese companies continue to trade at relatively low valuation multiples compared with most other major equity markets, reflecting persistent concerns over economic growth, the property sector, and the regulatory environment.

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.

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.