Why stock valuations don't matter much in global emerging markets

Analysts' earnings estimates are all over the place. A better bet for 2019 might be picking the stocks hit hardest this year

Like the Nasdaq, emerging markets are no strangers to booms and busts. Unlike the U.S. market, valuations no longer matter much outside the developed world. 

That’s because sell-side analysts’ earnings estimates are unreliable.

The 10 per cent correction in the Nasdaq 100 Index in October shouldn’t have surprised U.S. analysts – they’ve been revising down earnings estimates since April, when trade tensions started to brew.

No Surprise

Sell-side analysts were revising down their earnings growth estimates long before last month's Nasdaq sell-off

Aggregating estimates for all companies in the Nasdaq, the implied Ebitda growth rate for the next three fiscal years tumbled from a high