“Philip Ehrmann of Gartmore Investment Management in London is still a believer in emerging markets,” writes Jonathan Fuerbringer in today’s New York Times.

“As head of the Pacific and emerging markets unit and a manager of about $1 billion, he has been trying to persuade investors to move back in to these volatile markets.”

” ‘Over the next two or three years,’ Mr. Ehrmann says, ‘this is going to look like a good entry point.’ “

“Not many people are taking his advice. ‘Very difficult,’ is how he described the job of selling emerging markets after a trip to the United States. ‘It’s pretty dark out there.’ “

“Pitch black, in fact.”

“Even with huge rallies from time to time, the leading index of emerging market stocks is off 43.3 percent since 1993, in dollar terms, and 29 percent in the last year. The last decade is replete with crises that have reduced or erased gains from previous years, like Asia’s financial collapse in 1997, Russia’s devaluation of the ruble in 1998, Brazil’s devaluation in 1999, Turkey’s this year, and Argentina’s struggle to avoid default on its debt and devaluation of its currency.”

“Their hopes dashed, investors, big and small, are again heading for the exits — and this time they may not come back for a while. The net outflow so far this year is $1.3 billion, or 6.6 percent of the assets in stock mutual funds dedicated to emerging markets, according to AMG Data Services. Last year, $1.9 billion moved out of the funds, the third consecutive year for a drain in investments.”

“But the investor flight has done more than simply bring money back home. It is changing the nature of emerging markets as a place to invest, affecting who is investing and, in turn, altering how Wall Street approaches these markets. This means that even as Western investors continue to hold a stick over the fiscal and monetary policies of many developing countries, they are directing less money to many of them while concentrating on a handful of favorites, like Brazil.”

” ‘The emerging market industry is a pale shadow of its former self,’ said Arturo C. Porzecanski, chief economist for emerging markets at ABN AMRO Securities. ‘It was hot; people wanted to come work in this area. That is not true anymore.’ “