Legendary emerging markets investor Mark Mobius was recently interviewed by CNBC-TV18. Mobius, who has over 40 years of experience in this area, shared his outlook for emerging market stocks. From the Moneycontrol.com (India) website today:

Q: What is your call on emerging market equities now? Do you think it is conceivable that markets like India and other Asian markets actually go on to hit new lifetime highs sometime in 2010 or you would be more restrained in your optimism?

A: I am more on the optimistic side. I think you are going to see new highs as we go forward. I am not saying that is going to be next month, quarter or year, but as we go forward in this bullish environment, we will see new highs and the earning projections will be revised upwards. This will justify higher and higher prices. So I am quite optimistic in that regard which is why I think it is important for people to be invested and not to hold too much cash at this stage of the game.

If we look at the valuations, you will see we are more or less in the middle of the range in EMs. The low point was a price to book value about one time. The high point was about three times and now we are at two. That is at current valuations. As things get revised, the current valuation will come down and then there will be more upside to go through that three times book price level.

There will be a point when euphoria overcomes any doubts and we will be entering a bubble environment. During this time, we will have to be very cautious.

Source:

“Recent correction ‘usual’, still in bull mkt: Mark Mobius”
Moneycontrol.com (India), November 6, 2009

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