Emerging markets veteran Mark Mobius issued a stern warning to Brazil’s stock market investors. Bloomberg’s Michael Tsang and Alexis Xydias wrote earlier today:

The 65 days that plunged Brazil into a bear market are reminding investors that Latin America’s biggest economy is still an emerging nation.

Banco Itau Holding Financeira SA’s Roberto Egydio Setubal says Brazil has been transformed after inflation dropped to 6.1 percent from 6,800 percent in April 1990 and the nation got its first investment-grade rating. Templeton Asset Management Ltd.’s Mark Mobius isn’t convinced as interest rates rise at the fastest pace in the developing world and foreign investors sell equities like never before.

“You cannot say the country has changed,” said Mobius, 71, who oversees about $40 billion in emerging-market equities at Templeton in Singapore. “The experience they’ve had in responsible government spending and balanced budgets is relatively short. Inflation was high. We all have to be very mindful that these things can happen again.”

Rio de Janeiro, Brazil

Tsang and Xydias noted that Mobius’ Templeton Asset Management is among several firms that have become less bullish on Brazil. Last month, Templeton favored India, China, and Russia over Brazil, according to the Bloomberg reporters.

Source:

“Brazil Broken Markets Pit Bulls Against Mobius, Bears (Update2)”
Michael Tsang, Alexis Xydias
Bloomberg, August 4, 2008

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