World emerging market guru says ‘wonderful opportunities’ already available
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.