China's Shanghai Composite index spiked on Friday to close up 4.8 percent, tracking the upbeat sentiment across the region underpinned by Wall Street's biggest one-day gain since 2011 on Wednesday.  This bounce in China followed new stimulus measures from the country's central bank this week, including an interest rate cut.  "In general, we believe the market is overly focused on the perceived risks to China and EM in general. For evidence of this, one need only look at the very negative scenario that valuations are pricing in," Ross Teverson, head of EM strategy at Jupiter Asset Management, said.  Read MoreCan South Korean stocks sustain their gains?  The average price-to-book ratio for stocks on the MSCI EM index is now less than 1.3 times, a level not seen since early 2009, when emerging markets were still reeling from the impact of the financial crisis, according to Teverson. A price-to-book ratio is used to compare a stock's market value to its book value, and is a key metric used by traders to gauge the value of equities.  Teverson also stressed that investors should take note of the cash sitting on some company's balance sheets, which means firms are able to comfortably cover costs, invest for growth and offers can potentially be redistributed among shareholders.  "If we look at individual companies, many are trading at levels where declining valuations mean that cash sitting on their balance sheets has become a significant proportion of their overall value," he said.  Small cap China Distance Education for example, a U.S.-listed Chinese firm that provides online vocational training courses, has cash worth almost 30 percent of its market cap, according to Teverson. Among the large caps, Samsung Electronics and semiconductor supplier Mediatek are both sitting on hefty cash piles.
Some investors are now arguing that the supposed weakness in EM -- largely fueled by fears of slower Chinese growth -- is overblown.