Investors are still keen on the BRIC markets after recent Stock Market dives, despite the increasingly grim economic data, with China still seen as the favourite place to go.

But some are saying that Russia, which has seen catastrophic drops in its economy this year, does not deserve to be in the group any more.

The International Monetary Fund (IMF) warned on Monday that it might cut its forecast for Chinese economic growth to about five per cent from its November estimate of 8.5 per cent.

Brazil and India are also expecting sharp falls, while Russia has been sending mixed messages on whether or not it is already in recession. Industrial growth in all is falling.

Investors in BRIC equities have had a brutal year, with some of the heaviest falls in the world dragging down the BRIC-dominated benchmark emerging stocks index by almost 55 per cent. Brazil, India and Russia have also seen their currencies fall.

Now, investors are becoming increasingly discriminating, seeing good value in China – down 62 per cent this year – but ongoing danger in Russia, which has lost almost 70 per cent.

Morgan Stanley has moved its position on Chinese equities to overweight in recent weeks, praising China as having the strongest balance sheet in emerging markets. Almost every Chinese indicator might be faltering, but Millennium Global strategist Claire Dissaux said it was still her favourite key market.

“China has a very high savings rate,” she said, while refusing to discuss how much of her fund’s assets were there because she was not authorised to do so. “Of course, their growth will go down as they can export less due to the recession elsewhere, but they will have a lot more room to manoeuvre.”

While many emerging economies – particularly oil producers such as Russia – have haemorrhaged foreign reserves in recent months by trying to support currencies, China says it still hopes its reserves will to top £1.3 trillion by the end of the year.

Partly as a result, China’s currency has come under much less pressure while Russia has been forced to accept gradual depreciation, as has India,. The free-floating Brazilian real has lost a third of its value since August.

Analysts expect China to colossally increase local infrastructure spending in the hope of compensating for falling export manufacturing demand, keen to maintain growth of over 8 per cent and domestic political stability.

Indian and Chinese equity markets had been under pressure well before the market crash of September, having lost up to half their value as speculative booms unravelled. But investors see them as likely best performers when recovery returns.

Emerging market specialists say they believe that just as developing markets have underperformed more established markets on the way down, they will outperform them on the way back up.

While China holds the top spot on most BRIC tip sheets, analysts are more divided over Brazil and India.

Brazil’s status as a commodity exporter is seen as leaving it exposed, but analysts say the country has more room to manoeuvre than most when it comes to cutting interest rates and are generally praising its economic policy.

Investors like India’s primarily domestic-focused rather than export-orientated economy, as well as its relatively well -capitalised banking sector, but worry over external debt amounting to some 80 per cent of gross domestic product, while the Mumbai attacks have helped to further undermine sentiment.

Meanwhile, few have a good word to say about Russia. “In terms of BRICs, I don’t think Russia belongs in that group any more,” said Millennium’s Dissaux.

Investors have dumped Russian assets since August, troubled by the Georgia conflict, several high-profile rows over Western investments,and Russian firms’ vulnerability to the global crisis.

Nosediving oil prices, together with the repeated closure of the stock market during some of the most brutal volatility in emerging markets, means few are eager to return in a hurry.

“Prices in Russia have collapsed more than anywhere else and so they do look very cheap.” said Standard Life investment director for global strategy Jason Hepner. “But it would be a brave man who went into Russia at the moment.”

Standard Life was underweight emerging markets, he said, with a larger position in Asia and nothing in Russia.

London-based fund manager F&C – which has lost roughly a third of the £2 billion it had in emerging markets at the start of the year – is in a similar position, overweight India and China and underweight Brazil and Russia.

Even funds such as F&C that have Russian positions prefer to avoid having money in Moscow themselves, instead investing in Russian stocks in London that can still be accessed even when Russian exchanges temporarily close.

Overall, analysts say recovery in emerging markets is more dependent on what happens in the United States, both in terms of Wall Street moves and whether the dollar’s rally continues.

For that to happen, investors must decide that the torrent of grim economic and corporate news has been fully priced in, allowing stocks to recover.

“The chances of the recovery beginning in emerging markets are close to nil,” said F&C’s head of emerging equities, Jeff Chowdhry.