Emerging-market stocks are "cheap" and Pacific Investment Management Co. is buying in China after the nation's shares tumbled this year, said Maria Gordon, an emerging-market equity-fund manager at Pimco.

"We are definitely fishing in the more cyclically distressed areas of the market where valuations are very, very cheap," London-based Gordon said in an interview with Sara Eisen on Bloomberg Television today. "We're selectively accumulating positions" in China, Gordon said, adding that shares of Hong Kong-based insurer AIA Group Ltd. (1299) are poised for "a lot of capital appreciation."

The MSCI Emerging Markets Index has tumbled as much as 31 percent from this year's high, sending its price-to-earnings ratio to 9.4 on Oct. 5, the lowest level since December 2008, according to data compiled by Bloomberg. The Hang Seng China Enterprises Index, a gauge of Chinese companies listed in Hong Kong, has slid 38 percent from a 30-month peak in November as tight monetary policy in the biggest emerging economy and Europe's debt crisis spurred investors to sell riskier securities.

"Markets are cheap," Gordon said. Still, "it's very difficult to call the bottom" given concerns that the global economy is slowing, she said.

Emerging-market equity funds have posted 10 straight weeks of outflows, with investors withdrawing $3.3 billion in the seven days ended Oct. 5, according to data compiled by Cambridge, Massachusetts-based research firm EPFR Global. China funds had $167 million of outflows during the week.

Structural Growth

The MSCI emerging gauge rallied 7.1 percent in the past four days, including a 0.7 percent gain to 890.22 as of 1:18 p.m. in London. Stocks rose today after the leaders of France and Germany pledged a plan to stem the region's debt crisis.

AIA, which reported a bigger-than-estimated 24 percent increase in first-half profit in July, has "a story of structural growth," Gordon said. The stock slipped 1.3 percent today, paring this year's gain to 3.7 percent.

To contact the reporters on this story: Jason Webb in London at jwebb25@bloomberg.net; Michael Patterson in London at mpatterson10@bloomberg.net.

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net.

More on emerging markets:

Why contrarian legend Wilbur Ross is buying now

Dr. Doom Marc Faber expects a huge rally in stocks

Bond King Gross: Invest in these countries to avoid recession