Emerging markets are attracting more money from initial public offerings than industrialised nations for the first time ever, a warning sign that the record rally may turn into a 20% decline, according to Mark Mobius, who oversees $34 billion of developing-nation assets at Templeton Asset Management Ltd.

Faster economic growth may help China, India and Brazil to come up with more IPOs and almost double sales to $200 billion worldwide, according to Matthew Johnson, the New York-based head of the global-equities syndicate at Barclays Plc. Poland alone may offer more than $10 billion of the state-owned companies, according to estimates by UniCredit SpA. India is also expected to raise around $8 billion from disinvestment of public sector undertakings.

Companies in the MSCI Emerging Markets Index trade at the highest levels relative to earnings since 2000 after the gauge surged 75% and IPOs in developing economies raised $77 billion. The 2009 sales exceeded industrialised nations by 160%, the first time developed countries attracted less money, annual Bloomberg data starting in 2000 show.

?When you look at the size of some of these IPOs, they?re pretty massive,? Mobius. ?At the right price, the IPOs will be absorbed, but you?re going to have some hiccups. It?s too much supply coming out.?

Investors are paying the most for profits in developing nations since April 2,000, with the 767 companies in the MSCI Emerging Markets Index valued at an average 24.2 times earnings, data compiled by Bloomberg show.

?There are some clouds on the horizon,? said Marc Faber, 63, who publishes the ?Gloom Boom & Doom? newsletter. ?For sure, the supply of equities will go up because the valuations are up,? he said.

However, emerging-market companies are the best stocks for this year because earnings will increase faster than in industrialised countries, said Jeffrey Palma, the head of global-equity strategy for Zurich-based UBS AG.

Emerging markets are really the only place to be,? Palma, based in Stamford, Connecticut, said last week. ?The developed markets are really going to lag from a growth and an earnings standpoint.? Emerging market stocks and bond funds closed 2009 with record annual inflows as a recovery from the global financial crisis boosted demand for riskier assets, according to US-based research company EPFR Global.

Emerging market equity funds received $64.5 billion, while those investing in developing-nation fixed-income securities drew more than $8 billion, EPFR in Cambridge, Massachusetts, said in an e-mailed statement, citing initial figures from funds reporting daily and weekly.