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        ATTRACTIVE VALUATIONS                               markets. With the size of the global middle class expected to
        The recent weakness in emerging market equities has widened the   rise considerably over the next decade, and the bulk of the gains
        valuation gap with developed markets even further from already   coming from the Asia Pacific region, we believe the slowdown
        discounted levels.  The underperformance of the asset class has   will be short-lived. Once the pandemic-related challenges start to
        caused the MSCI Emerging Markets Index to trade at a 30-35% dis-  level off, the rising middle class should support increasing con-
        count relative to the MSCI World Index and a 40% discount to the   sumption and underpin growth trends for years to come.
        S&P 500 Index. This is significantly below historical averages. While
        much  of  the  discount  is  attributable  to  the  valuation  premium   TECHNOLOGY LEADERS
        associated with US stocks, emerging market equities are nearing   Over the last decade, emerging markets have transformed from
        their cheapest levels in over 20 years. These attractive valuation   cyclically-oriented, commodity-based markets to high-powered
        levels will surely appeal to valuation conscious investors.    technology leaders. While cyclical factors continue to play a role,
                                                            the Technology sector has emerged as one of the most important
        EXPANDING MIDDLE CLASS                              drivers within emerging market growth. While China was at the
        The rapid ascent of the middle class has been one of the key   forefront of this revolution, a growing list of tech-related compa-
        drivers behind the explosive growth in emerging markets over   nies within the emerging market universe are trying to capitalise
        the last two decades. While the pandemic may have stalled con-  on the growing markets for e-commerce, mobile banking, artifi-
        sumption growth across the globe, we do not believe that the   cial intelligence, health care, electric-vehicle batteries and more.
        slowdown will turn into a permanent impairment in emerging   We expect these trends to continue as more companies look to
                                                            meet the needs of their tech-savvy consumers.

                                 Emerging Markets are Attractively Priced

                   25                                                                       -25%
                 NTM Price-Earnings Ratio  15  13.1  -33%                                   -35%  Emerging Markets Valuation Discount


                    5                                                                       -40%

                    0                                                                       -45%
                         MSCI Emerging Markets      MSCI World                S&P

                                          Price-Earnings       Valuation Discount
                     Source: FactSet, as of 9/7/2021

   9   10   11   12   13   14   15   16   17   18   19