Chinese shares, as represented by the MSCI China index, have outperformed wider emerging markets in the first part of 2025 but, overall, valuations still lag those seen in the wider developing and developed world.

As at 31 May, constituents of the MSCI China index traded on an average forward PE (price to earnings) ratio of 11 times. This compares with 12.2 times for the MSCI Emerging Markets index and 18.1 times for the global MSCI ACWI (All-Countries World Index).

On a price to book basis, MSCI China is on 1.5 times compared with 1.8 for the broad emerging markets index and 3.2 for the MSCI ACWI.

Comparing China with other major individual emerging markets, constituents of the MSCI India index trade at a significant premium on a forward PE of some 22.3 times and a price to book value of 3.9 times. Meanwhile, MSCI Taiwan is on a forecast PE of 14.6 times and a price to book of 2.7 times.

MSCI Korea and MSCI Brazil are examples of emerging markets which look optically cheaper than China. MSCI Korea has a PE of 8.5 and a price to book of 0.96 and MSCI Brazil has a PE of 8.1 – although the latter trades at a slight premium to MSCI China in price to book terms with a ratio of 1.6 times.

This outlook is part of a series being sponsored by Templeton Emerging Markets Investment Trust. For more information on the trust, visit www.temit.co.uk

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