FUND VIEW - Emrg markets to grow robustly despite U.S. -HSBC

LONDON (Reuters) - A mild recession, limited to the United States, will enable emerging markets to weather the current storm and grow robustly in 2008, allowing stock valuations to remain attractive, HSBC Asset Management said on Monday.

"While the discount gap in the valuation of emerging markets is largely closed, earnings growth prospects look attractive relative to those within the developed world," the asset management firm said in a note.

The HSBC unit manages over $85 billion in emerging markets.

Earnings in the developed world will show little or no growth at all this year while emerging markets should be able to generate close to 18 percent earnings growth this year, HSBC said, citing data from the Institutional Brokers Estimate System, a service that monitors earnings estimates.

"At a time of slowing growth in the developed world, emerging markets appear as the only remaining reservoir of growth in the world," the note said.

Emerging equities gained almost 40 percent last year but have underperformed so far in 2008, shedding some 13.3 percent compared with the corresponding world index which has lost 10.7 percent.

Most economists believe emerging markets will not escape the consequences of a full-blown downturn in the developed world but HSBC Asset Management said there was hope that recent policy actions by the Federal Reserve would fend off a severe recession.

The HSBC arm cautioned however that valuations in some emerging countries were too high despite the recent correction, with India trading at around 16.5 times 2008 price-to-earnings and China even higher at 17.6 times,

The ratio for broader emerging markets is 12.3 times, with Brazil and Russia especially attractive at 10.7 times and 10.3 times respectively, it said.