Templeton Asset Management executive chairman and emerging markets veteran Mark Mobius believes that China and Asia might escape the worst of the ongoing global financial crisis. Drazen Jorgic of Citywire (UK) wrote last Friday:

On Tuesday, China slashed its interest rates by 27 basis points to 6.66% – a third such cut in six weeks. And while the reason behind lower rates is widely believed to be fear of slowing global demand, Mobius points out that China has not suffered as much as expected.

‘There’s no question there will be a hit to the export market’, Mobius conceded. ‘We have seen that in a number of countries around the world but the actual exports of China have not come down yet. Some of the demand for Chinese products is ever-lasting because China is the only place that can make these products for these prices,’ he says.

Mobius believes that the Chinese economy will continue to grow at around 6-8%. ‘They’ve diversified their exports to emerging markets around the world and been pumping up domestic demand. So we see a surprisingly low decline in their exports but it remains to be seen how long the slowdown lasts,’ he says.

Mobius thinks that the fate across wider-Asia in the financial crisis will largely depend on Japan and China. However he stresses that China is creating further demand by enacting substantial reforms for the country’s farmers who make up some 750 million of the population. These reforms will give farmers the rights to their land.

‘They are going to generate an incredible increase in wealth in the countryside and that will translate to consumer demand,’ he says.

Chinese outdoor mall

Source:

“Mobius buying stocks as EM approaches bottom”
Drazen Jorgic
Citywire (UK), October 31, 2008

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