Mark Mobius, a veteran investor in developing nations, said now is the time to buy their equities and favors India, Brazil and Turkey.
“We’re particularly interested in India at this stage,” Mobius said in a Bloomberg TV interview in Singapore on Friday. “I just came back from a two-week trip to India and I was just amazed at the changes taking place.”
Mobius cited “terrific recovery” in many of developing economies as reasons for investors to buy after all assets -- stocks, currencies and bonds -- suffered a losing year in 2018 amid concerns over the U.S. - China trade war and the Federal Reserve’s tighter monetary policy.
“It’s quite incredible, and of course you’re looking at 7 percent growth for a country that size, it’s very impressive,” he told David Ingles and Rishaad Salamat, referring to India.
Mobius, who set up Mobius Capital Partners LLP last year after three decades at Franklin Templeton Investments, said this is where he would put his money:
- 30 percent in India
- 30 percent in Latin America which includes Brazil, Argentina, Chile and Mexico
- 30 percent in Eastern Europe like Poland, Romania and Turkey
- The rest in China and other parts of Asia
Mobius’s other market views:
- Valuations for developing-market equities are very attractive and much lower than in developed countries, he said, citing price-to-earnings ratio and price-to-book value
- Trade issues between China and the U.S. won’t be a “big downer”; other countries are exporting to the U.S. and Chinese companies have factories in other parts of the world, so they’ll just ship products from other countries
- Despite the election risk in India, Mobius said he doesn’t see a reversal of reforms, especially on the goods and services tax
- “There is no way that they are going to reverse it because everybody has got a vested interest. The states are benefiting from this and they have a say. One of the reasons why the country is growing is because the barriers between states are coming down”
- If there’s a new government in Venezuela, investors will take a look again because it’s potentially a very rich country. “You can see a very fast turnaround”
- Mobius is interested in commodity countries such as Brazil, where iron ore is huge, as as well as Argentina and Chile. “There’s no question that commodity companies and commodity countries will survive and do well simply because the demand for commodities will continue to go up” despite prices going down
- “We probably would be doing more in China” and sees opportunities in domestic-oriented companies and firms with a lot of production overseas
- Mobius sees the “worst is over” for Turkey and the nation would be recovering going forward
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