Why 'Chelsea tractor' syndrome will boost Chinese shares For every 1,000 people in the US, there are about 815 cars. For every 1,000 people in China, here are only 70 cars, so you can imagine the scope of demand. The sluggish economic recovery has not dented China's love affair with the automobile whatsoever, leaving the potential for growth from here virtually exponential. Higher end vehicles are leading the way and China is set to outstrip the US as the leading market for premium cars in a few short years. In 2012 alone, SUVs saw 40pc growth. Take for example a company called Great Wall Motor Company. Its dominant market share in the fast growing SUV market plays into the appetite for luxury from an emerging consumer class. It has a strong brand in China and a track record of excellent operations. This stock exhibits characteristics I look for when investing: strong economics, the prospect of strong returns in the future and good governance. So back on the streets of South Ken, what does all this really have to do with us? The investment opportunity in China's booming car culture is a powerful microcosm of the emerging markets story. Yet it is in danger of being overlooked because investors are sceptical about emerging markets. This scrutiny is deserved. Emerging market share prices are lagging developed peers by over 20pc and U.S. stocks by a third. Underperformance has been significant, so much so that these assets are "cheap." But if the greatest maxim of investing is "buy low and sell high," then this asset class demands attention. Consider it in terms of bargain shopping. A shoe sale will bring women in droves with sharp eyes for cut rates. If we seek the best deal when buying shoes, why don't we apply the same principles to how we invest? The answer is human nature. People just don't like uncertainty. But uncertainty brings opportunity. Emerging market equities are at bargain rates. To judge prices we use a signal. That signal is a ratio called price/book value that compares where the market is valuing a company (price at which it trades today) versus how much its actual balance sheet is worth (book value). Valuations above 2.5x price/book value signals irrational exuberance. Think of the tech bubble. Every man and his dog is crowding into the market. In contrast, at 1.5x price/book value, people are running scared with 101 reasons to steer clear of investing. Where are we right now? Currently 1.4x price/book value. Almost every emerging market is dramatically cheaper than its own history. If you believe valuation is what matters and you have patience to see through your investment for the long-term (at least one to three years), then this discount is hard to ignore. Emerging markets can be very momentum driven in the early stages of a cyclical recovery. Ask yourself if you really want to miss the best clearance rate deal on the market. Richard Titherington is chief investment officer for emerging markets at JP Morgan Asset Management.