Many things have changed since I began as a fund manager in 1995. My bosses flew Concorde and we could smoke at our desks after 6pm as we pondered what to buy with our car allowance.

But so much more has stayed the same. When it comes to investing, US companies still trump all comers. Europe muddles along, as ever. And of course a new century dominated by emerging nations is due any second now.

When I say “just around the next corner” my children immediately assume the pub is miles away. So how anyone has managed to keep a straight face selling emerging market equities is one of the mysteries of finance.

Aside from a seven-year stretch beginning in 2002, developed market stocks have trounced them pretty much my whole career. So relentlessly dire have relative returns been, especially post-financial crisis, that when the word “emerging” is spoken, all I hear is a gurgling noise.

My ears have unblocked recently, however. First, because I’m conscious that beyond Asia and India my portfolio doesn’t have a penny in another emerging market (as defined by MSCI).

No Latin America, Africa, nor all those places in central Europe you backpacked through after the Berlin Wall came down because they were basically free. That’s 15 per cent of the world’s 70,000 public companies, according to my Capital IQ database.

Second, I’m a contrarian. Global inflows into emerging market funds since January are 30 per cent down on this point last year, according to LSEG Lipper estimates, which in turn were two-thirds lower than 2021.

Then on Monday along comes Ruchir Sharma, chair of Rockefeller International, who wrote in this newspaper that “a major comeback is under way” and investors have “yet to respond”. He was persuasive.

To summarise, emerging economies are outpacing developed-world ones on an output per capita basis and no longer just because of China. Earnings are expanding faster, too — as are margins. All positive stuff, he said.

I remember reading such arguments back when I was wearing pinstripe suits (no belt, obviously) and Hermès ties. The buy-pitch never seems to change

Sharma also reminded us that many western countries are heavily debt dependent, with expensive stocks to boot. Emerging economies in aggregate are less stretched. Likewise, their stock markets trade at deep discounts to developed equities.

And yet and yet. The problem for me is that I remember reading such arguments back when I was wearing pinstripe suits (no belt, obviously) and Hermès ties. The buy-pitch never seems to change. 

Emerging nations have young and fast-growing populations! They want to buy more things! Companies are cheap and less reliant on dollar funding! Governments are reforming! The west’s apogee has passed!

So why haven’t these obvious facts — as true as when you could fly from London to New York in 3.5 hours as they are today — translated into emerging stocks outperforming old-world bourses?

They still might. But I fear the likes of Sharma misread the runes. Take the statistic that from next year more than 80 per cent of emerging nations will have output per capita growth exceeding that of the US — up from about half in the period between 2020 and 2024.

Sounds good apart from the fact this level was also reached in the first 15 years of this millennium, when emerging markets only outperformed their developed cousins for less than half the period. That’s also a quarter century of no relative progress.

Meanwhile, median US household real income fell from $67,650 in 1999 to $63,350 in 2012 and real wages did nothing but move sideways. Over these years, however, the S&P 500 rose a fifth, a period which includes the dotcom bust and financial crisis.

Clearly there is more to equity prices than money in pockets — a point I have made often in this column. The mistake is equating volumes and value. Top line growth does not guarantee superior shareholder returns.

It doesn’t even guarantee rising profits. Think of what happens when demand surges for a product or service in Nigeria or Brazil (or anywhere for that matter). Capital flows in, competition increases, returns moderate.

And even that assumes all companies are trying to maximise their returns on capital. Often, bosses are more interested in empire building, market share, or paying themselves more. In many emerging markets, holders of equity are far down any priority list.

Another big mistake I think believers in emerging markets often make is also ubiquitous, but they make it with bells and sparkles on. And that is to forget that current prices discount the future many years and decades out.

My pet crocodile knows that power, influence and wealth are shifting south and eastward — as my colleague Janan Ganesh reiterated in his column on Tuesday. The stats are clear. Demography is destiny.

Thus, the emerging world’s golden century is already reflected in prices to a large extent. Nor are valuations any more attractive just because they are at least 35 per cent lower on a forward price-to-earnings basis, say, than the developed world’s. Such claims are simplistic and mislead absolute investors, those focused on making money, as opposed to institutional investors more concerned with relative returns against a benchmark.

It’s not just that the MSCI world index, for example, is crammed full of insanely expensive technology stocks (the US now makes up 72 per cent of this index and IT a quarter), making any claim to be cheaper somewhat, er, rich.

The MSCI emerging markets index is itself skewed by a 25 per cent weighting to China which, due to an imploding real estate sector among other reasons, has a forward price/earnings ratio of nine times — flattering comparisons still further.

In other words, it is perfectly possible that the valuation discount between emerging and developing market stocks will narrow, but owners of the former still incur losses. Not good: investors such as me are not playing a relative game.

If emerging equities are a bargain relative to history and their own fundamentals, however, that’s different. I will be exploring this next week.

The author is a former portfolio manager. Email: stuart.kirk@ft.com; Twitter: @stuartkirk__

Sir Keir Starmer cannot sidestep Brussels as he seeks to improve the UK’s post-Brexit ties with the EU, officials in the bloc have warned after the British prime minister’s trips to Berlin and Paris.

In the last few days Starmer met German Chancellor Olaf Scholz and French President Emmanuel Macron in the latest flurry of diplomacy with EU leaders since he entered Downing Street last month.

During the two-day tour he talked up his proposed UK-EU “reset” and emphasised his desire for “a closer relationship on a number of fronts, including the economy, including defence, including exchanges”.

However, he also reiterated his red lines on Brexit, which include no UK re-entry to the EU single market or customs union, or the return of free movement.

Within the bounds of these strictures, EU diplomats said there was little scope to improve ties with the UK.

EU member states had some “wriggle room” to allow easier access for British workers and students and industrial collaboration, one diplomat said.

“But you can only get a reset by going to Brussels. The red lines haven’t changed. Something needs to give on the UK side if it wants to restore the relationship,” they added.

The UK’s attempts this week to talk up the breadth and depth of a new bilateral treaty being negotiated with Germany, which both sides hope to finalise by early 2025, raised eyebrows in the EU.

German officials dismissed a suggestion by Downing Street that the two nations would discuss “market access” as part of the treaty, highlighting how the single market and trade were EU competencies, not national ones.

One said the treaty would not change anything covered by the EU-UK post-Brexit deals.

“A visit to Germany is not a game-changer,” said one EU official, adding: “There’s a huge focus on the bilateral dimension between the UK and Germany or France, but the EU is composed of 27 states and of course the sole interlocutor if you want to reset relations is not Berlin, Paris, Rome or Tallinn — it’s Brussels.”

The official said it was “very good news” the UK was pitching a “reboot” of relations with the EU, but repeated the bloc’s line that any British proposals that threatened to jeopardise the single market would be “tricky” to take forward.

Starmer is expected to meet European Commission President Ursula von der Leyen before the end of the year.

The EU’s main ambition regarding the UK is a youth mobility scheme, with a proposal made by the bloc in April. It also wants Britain to rejoin the Erasmus student exchange programme to allow its citizens to study in the UK more cheaply.

The EU’s offer this spring elicited a cold response from Labour officials, then in opposition, who said they viewed youth mobility as synonymous with free movement. But some Labour figures, including London mayor Sadiq Khan, are pushing for a deal.

This week Starmer said he has “no plans” to negotiate a formal youth mobility scheme, but did not explicitly rule out launching talks on one in future.

The previous UK Conservative government offered bilateral mobility deals to several states including Germany, which prompted the commission to table the EU-wide proposal. Officials do not rule out some member states being able to go it alone if EU-wide progress proves impossible.

One of the Starmer government’s priorities is a new UK-EU security pact “to strengthen co-operation on the threats we face”.

The EU views the current informal co-operation between the bloc and the UK on defence and security as working well — with co-ordination on sanctions, Ukraine and China taking place via the G7, Nato and other forums.

However, EU officials said the bloc would be amenable to formalising a more structured dialogue, as it does with the US.

Following years of tensions under the Conservatives, the new Starmer government believes there is mileage in overhauling the tone of UK-EU relations and has criticised the “botched” Brexit deal negotiated by former prime minister Boris Johnson.

Starmer said after meeting Macron on Thursday that the pair had discussed “the wider reset” with the EU, as well as developments in Ukraine and the Middle East, plus bilateral trade, illegal migration and security issues.

The British prime minister described “growing the economy” as the “number one mission” of the UK-EU reboot.

Anand Menon, director of the UK in a Changing Europe think-tank, said Starmer’s warmer rhetoric on UK-EU relations was “desirable” and would genuinely “smooth the wheels of diplomacy” by making it easier for politicians and officials on both sides to work together.

But he added the UK and the EU were playing a “defensive” game and it was too early to see how it could lead to “substantive” change in the relationship.

Ahead of the UK election, Labour’s specific demands regarding the EU included a veterinary deal, an agreement on the mutual recognition of professional qualifications, and greater ease for UK artists to tour within the bloc — proposals which were criticised as underwhelming.

Labour’s demands were “massively unambitious” and of “trivial” economic scale, Menon said, but “despite that, they might be quite hard to get”.

Are Donald Trump and JD Vance really the leaders we want representing our nation’s military? I don’t.

Republican presidential candidate Donald Trump has continued his divisive antics this week by desecrating a sacred moment of remembrance for the American troops killed in a suicide bombing three years ago in Afghanistan.

In a time that should have been used to comfort and unify the nation, Trump instead saw another opportunity to promote himself. Even worse, Trump’s staff reportedly got into a physical altercation on Monday with an Arlington National Cemetery employee after they were told not to record video inside the cemetery.

Federal laws and U.S. Army regulations prohibit political activities on the cemetery grounds. Trump and his campaign staff blatantly ignored those restrictions, and then attacked the cemetery employee who tried to uphold the law, even describing her as a “despicable individual.”

Army rebukes Trump campaign over Arlington visit, Vance says Harris ‘can go to hell’

“This incident was unfortunate, and it is also unfortunate that the ANC employee and her professionalism has been unfairly attacked,” the Army said in a statement released Thursday. “ANC is a national shrine to the honored dead of the Armed Forces, and its dedicated staff will continue to ensure public ceremonies are conducted with the dignity and respect the nation’s fallen deserve.”