Already battered emerging markets stocks and currencies may face the specter of further outflows, but some analysts are tipping they've become the Mystery Science Theater 3000 of assets: So bad they're good.
In emerging markets, "you don't have earnings growth, ROEs (return on equity) are continuing to decay (and) forex volatility is against you. It's not the best of pictures," Bhaskar Laxminarayan, Pictet Wealth Management chief investment officer for Asia, said at a press conference last week.
But there's a saving grace: "At least from a valuation perspective, you're getting it at a discount," Laxminarayan said. "Given such a wide gap, chances are a lot of the negatives are being priced in, including currency volatility."
Emerging markets have certainly had a tough year: In addition to currencies such as Malaysia's ringgit and Russia's ruble becoming some of the world's worst performing, the MSCI Emerging Markets stock index is down around 19 percent so far this year.
Within Asia Pacific ex-Japan, shares are trading at 12.1 times 12-month forward earnings, compared with the long-term average of 12.4 times, according to data from Nomura. The 12-month trailing ROEs are at 11.2 percent, compared with the long-term average of 12.6 percent, the data show.