A weak oil price and a strong dollar rally will put pressure on emerging markets, but valuations for many emerging markets should soon be compelling. Emerging markets have been in a downtrend relative to the S&P since 2010. We will likely see further weakness ahead for emerging markets as a strong dollar bites, but amidst the panic, longer-term, patient investors will be rewarded by much lower valuations in select EMs.
We mentioned in our 2015: A Year of Opportunities report Russia and Brazil as two EMs that may offer profitable opportunities for entry this year. India remains one of our favourite EMs, while the Philippines, Thailand and Indonesia have leading indicators that are turning up and thus whose stock markets may be well supported for at least the first half of 2015.