Emerging Market Shares Battered: Is It Time To Buy?

Share markets have been uncertain recently as several events have threatened to disrupt the global economy's fragile progress toward recovery. Emerging markets have been one of the hardest hit by wild currency swings and falling commodity prices; but some investors are wondering if now might be a good time to pick up cheap investments.

Currency Problems

Big changes in currency valuations have had a big impact on emerging market economies and have left lawmakers scrambling to keep their nation's market afloat.

• Kazakhstan's central bank did away with the nation's trading band for the tenge, sending the currency 25 percent lower against the dollar on Thursday.
• Vietnam has devalued its currency for the third time this year after the yuan unexpectedly dropped lower this month.
• In other parts of the world, like Turkey, political instability is adding to the already mounting pressure on the local currency.

Related Link: Here's How New Rate Hike Predictions Are Affecting The Market

Investors Run From Emerging Markets

In June this year, Barclays BCS considered emerging market equities as a promising investment for traders looking to diversify. However at that time, analysts saw the Chinese economy as being more stable and none had predicted the People's Bank Of China's decision to devalue the yuan. Fast forward to August, when Markit's research showed that investors yanked $3.7 billion out of 229 ETF's that track emerging markets or invest in Brazil, Russia, India and China.

iShares MSCI Emerging Markets ETF EEM also lost around 20 percent as investors fled from the sector.

Time To Return?

With ultra low valuations and cheap shares up for grabs, some investors are eyeing emerging markets for deals. However, analysts say that could be a risky bet. With China's economic recovery still uncertain and the yuan on shaky ground, emerging market countries that trade with China could be in for further declines.

Russia could be a good play, but the global economic climate isn't stable enough to make that a sure bet. Instead, some analysts say emerging market funds appear to be moving parallel to commodity prices, and commodities aren't expected to make a swift recovery any time soon.