Emerging markets: decoupling is about to be tested

Can emerging markets withstand a downturn in the US or Europe? It's interesting to note that some of those who once thought so seem far less confident.

"These markets aren't emerging they're exploding," says Bill Mann on Motleyfool.com. The MSCI Emerging Markets index has more than quadrupled since early 2003 as emerging economies' fundamentals have vastly improved.

And now it is trading at a slightly higher price/earnings ratio than global stocks as a whole. This implies they can withstand a downturn in the US or Europe, says John Authers in the FT. With the world's biggest economy looking set for recession, the decoupling thesis is about to be tested in earnest.

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