LONDON — Emerging-market stocks are trading at the highest valuations relative to advanced-country shares in more than two years as faster economic growth persuades the biggest investors to look past historical sell signals.

The MSCI Emerging Markets Index is valued at 14.1 times reported profits and 1.9 times net assets, compared with ratios of 14.9 and 1.7 for the MSCI World Index, according to data compiled by Bloomberg. When developing-nation equities traded at these levels versus advanced-country stocks in June 2008, the emerging gauge sank 48 percent in four months and trailed the MSCI World index by 16 percentage points.

"In emerging markets, valuations are getting rich because you know the long-term story is very strong," Frederick Searby, a New York-based Latin America equity strategist at Deutsche Bank, said in an interview. "The growth prospects are much better."

HSBC Global Asset Management, Morgan Stanley and Deutsche Bank AG say this time is different because developing nations have less debt, more profitable companies and are growing twice as fast as advanced economies. Global money managers are more bullish on emerging markets than any region, while mutual fund investors poured $35 billion into the countries this year, even as they pulled $28 billion from the United States, Europe and Japan, data from Bank of America Corp and JPMorgan Chase & Co show.

"There is a case for a rerating of emerging markets relative to the developed world," said Philip Poole, the London-based global head of macro and investment strategy at HSBC Global, which oversees more than $400 billion and holds more developing-nation shares than are represented in benchmark indexes. "The fundamentals have changed."

The MSCI emerging gauge climbed 0.4 percent at 8:24 am in London after a report on Wednesday showed US manufacturing grew faster than economists estimated and the International Monetary Fund boosted its growth forecast for South Korea. The MSCI World index was little changed, while futures on the Standard & Poor's 500 Index declined 0.4 percent.

Emerging markets' share of world equity capitalization climbed to a record 25 percent in August, up from 22 percent a year ago, as the stocks outperformed developed markets amid signs that economic recoveries in the US and Japan have slowed, according to data compiled by Bloomberg. The MSCI emerging gauge declined 2.2 percent last month and was little changed this year through Wednesday. The MSCI World sank 3.9 percent in August and is down 4.9 percent since December.

All 10 of the world's best-performing major benchmark equity indexes last month were in developing countries, data compiled by Bloomberg show. Sri Lanka's Colombo All-Share Index rallied 9.6 percent as slowing inflation spurred the central bank to cut one of its benchmark interest rates to the lowest level in almost six years. Thailand's SET Index rose 6.7 percent after anti-government protests eased and exports climbed. Colombia's IGBC Index gained 6.2 percent.