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CFA U.K.: Investors increasingly seeing emerging markets as overvalued

Investor confidence in value opportunities in emerging market equities is waning, according to a survey of CFA Society of the U.K. members.

CFA U.K. said in its latest quarterly valuations index for the fourth quarter 2017, which polls members on views of value in equities, bonds and gold, said about 31% of respondents view emerging market equities as overvalued. That compares to 25% the previous quarter. In the fourth quarter, 36.1% thought emerging market equities were undervalued, vs. 40.1% in the third quarter. The remainder for each quarter thought the asset class was at fair value.

Respondents still think developed market equities are overvalued, at 68%, flat compared with views in the third quarter. Government bonds are seen as overvalued by 78% of respondents, also steady vs. the third quarter. Corporate bonds are seen as overvalued, but that view was held by a smaller proportion of respondents at 79%. In the third-quarter index, 82% viewed the asset class as overvalued.

However, CFA U.K. said investor confidence in gold is increasing, with 26% viewing it as overvalued, down from 31% in the third quarter.

"The respondents to our survey are still worried," said Will Goodhart, CEO of CFA U.K., in a statement accompanying the index. "Most believe bonds and developed market equities are overvalued and, following their run up over the past few quarters, fewer now believe that emerging markets equities are undervalued. The increased interest in gold suggests that respondents are looking for a store of value should their fears be realized, though it's also important to recall that our survey ran late last year, a time when the gold price had fallen steadily for a quarter and was starting to run back up."