‘India top preference among EMs’

MUMBAI:Emerging markets (EMs) guru Mark Mobius is upbeat on Indian shares, topping the list in the model portfolio of his latest venture Mobius Capital Partners. He sees 15% return for Indian markets until the end of 2018. Mobius, 81, started Mobius Capital Partners after retiring from Franklin Templeton earlier this year. The firm plans to raise around few billion dollars, and intends to focus on emerging and frontier market companies compliant with environmental, social and governance (ESG) criteria.

In a phone interview from London, he said the fund doesn’t intend to invest in the upcoming Saudi Aramco initial public offering (IPO) as it stands right now. He also believes oil may rise to $100 per barrel in 2018. Edited excerpts:

Which EMs/frontier markets look best placed at this point of time and why? Where does India stand in that order?

India is really at the top of our list. We have a model portfolio, and India has the highest weightage in that one, followed by China. After that, we are looking at Korea, Russia, Brazil.

India has around 20% weightage in the model portfolio. Valuations are looking stretched for some of the large cap companies in India but if we go down the list, many of the companies look very good, not only in terms of their valuation but also in terms of their potential valuation because of growing earnings.

I think the Indian stock market may gain 15% up to the end of 2018, driven by earnings growth.

Has Mobius Capital Partners already started operations? What are the expansion plans?

We have started operations but we have not launched our fund yet. We are waiting for the official approval, and it should happen probably next month.I would like to open an office in Hong Kong, and may be Mumbai, too, down the road.

How much funds do you plan to raise?

It would be a few billion dollars. The emphasis will be on governance. We want to help companies improve their corporate governance. The best way to have policies that improve the environment and continue to circle growth, is to have companies that have very good corporate governance

Which sectors are you upbeat on in India?

Some industrials that are related to construction. We like some of the IT companies, the up and coming ones with new and innovative products.

What are your thoughts on the oncedefensive bet—pharma sector in India ?

I think the pharma sector is still somewhat expensive. Many of them have hit the regulatory war.

Do you plan to invest in the Saudi Aramco IPO when it launches?

At this stage, the way it is now, we would not want to participate, unless there is a big change in policy.