Emering markets could attract substantial fund flows going forward, given the spectacular rebound they’re likely to experience, according to Morgan Stanley.
Based on a top-down analysis, earnings growth could be 40% just in the company’s base case. Their bull case is for 50% growth, while event their bear case still expects 15% earnings growth:
Even this bright earnings outlook doesn’t bring emering markets back to their recent peak earnings level. Earnings came down so quickly during the recent 2008 earnings recession, that they can easily spike back up and not be at insane levels.
If a V-shaped recovery is believable anywhere, it would be in emerging markets:
As check, Morgan Stanley also calculates earnings growth from a bottom-up perspective. On this measure they still expect 31% earnings growth from emerging markets in 2010. It appears that for emerging markets it’s not a question of whether their economies will bounce or not, but rather how high.
Check out the full table of growth expectations below: