Bar­gains galore

World emerg­ing mar­ket guru says ‘won­der­ful op­por­tu­ni­ties’ al­ready avail­able

Finweek English Edition - - Creating Wealth - LU­CAS DE LANGE ldl@mweb.co.za

THE IN­TER­NA­TIONAL CREDIT cri­sis won’t con­tinue for very long. Mean­while, there are “won­der­ful op­por­tu­ni­ties” avail­able in emerg­ing mar­kets, says Mark Mo­bius, ex­ec­u­tive chair­man of Templeton As­set Man­age­ment. Mo­bius – he’s re­spon­si­ble for in­vest­ments worth US$34bn – is re­garded as the top guru of emerg­ing mar­kets.

Though Mo­bius ad­mits the cur­rent cri­sis is very se­ri­ous and could end in a world re­ces­sion, what con­cerns him most is that con­trol mea­sures will be in­tro­duced that will ham­per the flow of cap­i­tal be­tween mar­kets. He refers to the re­marks by the In­ter­na­tional Mon­e­tary Fund that re­stric­tions on the flow of cap­i­tal will have to be looked at.

Says Mo­bius: “If every­one in­tro­duces ex­change con­trol it will be the end of in­ter­na­tional in­vest­ment as we know it.” He’s al­ready un­happy be­cause Malaysia in­tro­duced ex­change con­trol, which means for­eign in­vestors can’t take their money freely out of that coun­try.

Mean­while, the mar­ket’s volatil­ity means “won­der­ful” bar­gains are the or­der of the day. Mo­bius sees op­por­tu­ni­ties, es­pe­cially in Brazil, Poland, Thai­land and South Africa. But keep away from Nige­ria and the Ukraine, he warns. Templeton’s emerg­ing mar­ket divi­sion cur­rently man­ages $10bn in in­vest­ments, spread over seven unit trust funds. The im­pact of the cri­sis on mar­kets is shown by the fact that about a year ago that to­tal was $14bn.

An in­ter­est­ing point Mo­bius raised is that emerg­ing mar­kets now of­fer so much scope the risk is ac­tu­ally no greater than that of de­vel­oped mar­kets. He says when Templeton started in­vest­ments in emerg­ing mar­kets in 1987 there were five (in­clud­ing SA). Now there are more than 40, with Viet­nam one of the most re­cent ad­di­tions, where Templeton has opened an in­vest­ment of­fice.

Most of the more than 40 emerg­ing mar­kets not only cur­rently of­fer “won­der­ful” bar­gains but it’s also im­por­tant to note that their lo­cal pop­u­la­tions have be­come more pros­per­ous and able to in­vest to a greater ex­tent in their home mar­kets. That pro­vides a sup­port base not avail­able even in the re­cent past.

Mo­bius’s pol­icy of main­tain­ing his cur­rent in­vest­ments and con­tin­u­ing to buy top value stocks in the midst of mar­ket pan­ics rests on Templeton’s proven for­mula of when is the best time to in­vest. It looks as fol­lows: words, when news events start point­ing out a glim­mer of light ahead in the tun­nel. Mo­bius says the worst of the cur­rent cri­sis is over. Re­mem­ber, all crises pass and share prices start ris­ing when the heat of a cri­sis be­gins abat­ing. world­wide have the courage to buy when mar­kets look their gloomi­est and fear is the or­der of the day. they drop into your lap, if you have the abil­ity to re­main seated while every­one else is aban­don­ing their seats.

bar­gains come your way. value op­por­tu­ni­ties in suc­cess­ful com­pa­nies to the fore. be­come ex­ces­sive, as do their re­ac­tions, and the un­so­phis­ti­cated then sell their shares (or units). you should step back and de­velop a longterm view so you can de­cide whether it’s tem­po­rary or not. view in cri­sis sit­u­a­tions you’ll re­alise later you ac­tu­ally bought “gifts” on the mar­ket. psy­cho­log­i­cal skill to buy dur­ing a cri­sis.

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