Legendary emerging markets investor Mark Mobius is buying Indian stocks these days. According to Bloomberg’s M.C. Govardhana Rangan and Anil Varma this morning:

Mark Mobius is leading a return of fund managers to India as the nation’s biggest banks say demand for cars and homes will help them ride out a global recession.

“Domestic industries can build high profits and growth,” Mark Mobius, 72, who manages more than $24 billion in emerging-market assets as executive chairman at San Mateo, California based Templeton Asset Management Ltd., said in a Nov. 22 interview. He is buying Indian consumer-related stocks.

Mobius, along with a couple of other fund managers, are buying Indian equities after many gave up on the region. From the Bloomberg piece:

Templeton, Aberdeen Asset Management Ltd. and F&C Management Ltd. are buying Indian stocks as strategists predict a rebound in the rupee, after it fell 9 percent since Sept. 15 to 50.09 per dollar. That’s when the bankruptcy of New York- based Lehman Brothers Holdings Inc. caused credit markets to freeze, prompting investors to hoard cash and pare investments in everything but the safest government securities.

The median forecast of 17 strategists in a Bloomberg survey is for the currency to strengthen to 48.3 by the end of June.

“We are positive on India,” said Devan Kaloo, who overseas $30 billion as head of global emerging markets in London at Aberdeen, Scotland’s biggest independent money manager. “The key drivers for growth are domestic, with the prospect of rates coming down sharply into 2009.”

Kaloo and Mobius are buying after many global funds gave up on the market. Overseas investors turned net sellers of Indian equities this year, dumping a record $13.4 billion, according to data provided by the Securities and Exchange Board of India. They bought a record $17.4 billion in 2007.

Source:

“India Emerging for Mobius Followers Picking Bottom (Update2)”
M.C. Govardhana Rangan, Anil Varma
Bloomberg, November 24, 2008

Taking advantage of depressed stock prices around the world, emerging markets veteran Mark Mobius has been busy acquiring global equities. Bloomberg’s Fabio Alves and Monica Bertran wrote on Monday:

Mark Mobius said he’s “aggressively” buying consumer stocks, including cellphone companies, retailers, banks and furniture makers, as faster economic growth in China, India, South Africa and Turkey offsets sagging demand from developed nations.

“We see a consumer boom in all of those countries,” Mobius, who oversaw more than $24 billion in emerging-market stocks on Sept. 30 as executive chairman at Templeton Asset Management Ltd., said in a Bloomberg Television interview from Johannesburg. “Per-capita income is growing at a very rapid pace in these countries.”

Mobius, who has more than 40 years of experience working with emerging markets, thinks that the slowdown in the global economy might be shorter than most people expect. From the Bloomberg piece:

The global economic downturn may not be as long or severe as expected because of the coordinated fiscal and monetary stimulus put forth by policy makers worldwide, the 72-year-old investor said today…

The slowdown “will be rather short-lived and, of course, the markets will anticipate this,” Singapore-based Mobius said. “There will be some deceleration, but these are still fast-growing countries.”

São Paulo Stock Exchange, Brazil

Dr. Mobius also likes the prospects of Brazil, which he believes offers a great opportunity for investors. From the Telegraph (UK) earlier today:

Brazil has a growing consumer base with personal wealth to spend. This stands to benefit Brazilian companies, particularly in the consumer sector. Brazilian exporters also contribute to growth. We also favour undervalued companies with high dividend paying stocks, net generators of cash and low leveraged companies. At the same time, companies with a strong market position and competitive advantages are also attractive.

We continue to maintain a positive outlook on Brazil and its enterprises. We believe the irrational panic that forced many funds to withdraw from Brazil and the stress of the local currency due to the global liquidity concerns, have depressed valuations of the companies to create an enormous opportunity for investment.

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Sources:

“Mobius Says He’s Buying China, India, South Africa (Update2)”
Fabio Alves, Monica Bertran
Bloomberg, November 17, 2008

“Emerging market guru Mark Mobius punts Brazil”
Telegraph (UK), November 19, 2008

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

Emerging markets veteran Mark Mobius doesn’t think the recent selloff in commodities is the end of a boom which started back in 1999. Pratima Desai for Reuters UK wrote last week:

“When you have a long-term uptrend, excesses build up along the way. We are witnessing a correction,” said Mark Mobius, executive chairman at Templeton Asset Management.

“Demand for commodities will remain at a high level in countries like China and India. If we see a serious worldwide recession, then we will see the end of the commodities boom.”

In fact, Dr. Mobius believes commodities may just be the global economy’s “saving grace.” Reuters Kevin Plumberg said on August 15:

Mark Mobius, executive chairman of Templeton Asset Management Ltd, said he believes consumer demand in emerging markets will ultimately be one of the factors keeping the global economy out of recession. Mobius is a value investor who has long touted the inherent strength of emerging markets.

“What we like are the consumer plays. As much as possible we are trying to get exposure to consumer-oriented sectors, whether that is consumer banking or retail,” he said in a phone interview from Turkey.

In addition to China, Mobius, who oversees some $40 billion in assets, likes the technology sectors in Taiwan, India and Korea. His firm has also cut down on its exposure to the commodities sector while increasing holdings in consumer-oriented sectors in South Africa and Turkey, where he said interest rate rises have brought share prices down to attractive levels.

Levent Financial District
Istanbul, Turkey

Sources:

“Commodity rout a blip”
Pratima Desai
Reuters (UK), August 15, 2008

“RPT-ANALYSIS China and co stand between world and ‘recession’”
Kevin Plumberg
Reuters, August 15, 2008

According to the online edition of the magazine Pensions & Investments this morning, the bloom is off Chinese stocks, even as China finalizes preparations for the Summer Olympics. John D’antona Jr. wrote:

The Beijing Olympics start in a month, but for the Chinese stock market, the event is nearly over.

“The Olympics have provided a mild boost historically in terms of stock prices, and China was no exception. But then things fall after the event and you get a subsequent letdown. This has also happened in China. The Olympics are not a major driver there anymore,” said John Chisholm, executive vice president and co-CIO of Acadian Asset Management LLC, Boston.

Emerging markets equity managers are underweighting the Chinese stock market amid concerns over the country’s deflating stock-market bubble, rising inflation and limited corporate profitability…

D’antona talked about emerging markets veteran Mark Mobius and his view on Chinese equities. It seems the “Pied Piper of Emerging Markets” has a different opinion of China than his contemporaries. From the P & I piece:

Mark Mobius, executive chairman at Templeton Asset Management Ltd. in Singapore, wrote in an e-mail to Pensions & Investments: “With the large and growing consumer market, Chinese companies able to access the consumer (are) interesting for us. Also materials companies — natural resources — oil, etc., are of interest because of the growing demand.”

Mr. Mobius holds China Mobile Ltd., ICBC Industrial and Commercial Bank of China, Aluminum Corp. of China Ltd., PetroChina Co. Ltd. and China Petroleum and Chemical Corp. in his $8.37 billion emerging markets portfolio.

Source:

“Olympic glow already fading”
John D’antona Jr.
Pensions & Investments, July 7, 2008

Recently, the Gulf News (UAE) spoke to Mark Mobius, President of the Templeton Emerging Markets Fund, about global stock markets. Here’s what the legendary emerging markets investor had to say:

Market Outlook

GN: How long in your opinion will the bear market last?
MOBIUS: I believe the bear market that started in August 2007 is now in recovery phase but will not be immediately followed by a strong bull market.:

GN: Is it a good time to invest in equities? If yes, then why; if not, then when will the time come?
MOBIUS: Timing the markets is a very unforgiving exercise and I wouldn’t recommend it to anyone. We at Templeton simply continue to try to buy stocks that are cheap at a given moment. The mere fact that we only have no more than five per cent in cash in most of our funds indicates that we are optimistic and that we are prepared for a market bounce.

Emerging markets valuations have also come up quite significantly in the past few years, but so have earnings, so emerging market equities continue to offer good price-earnings characteristics…

Emerging markets this year are expected to experience an average gross domestic product (GDP) growth of seven per cent, while developed markets are expected to grow at an average of a little more than two per cent…

I would suggest that investors take a long-term view to investing, carefully evaluate their options and of course, diversify their holdings. History has shown us that the best time to buy is when everyone is despondent and selling.

Where To Buy

GN: In which countries, in your opinion, do equities have the biggest growth potential and why (are people talking a lot about Brazil recently)?
MOBIUS: Some of the fastest growing nations in the world today are the BRIC (Brazil, Russia, India and China) countries. The Chinese and Indian consumers are the world’s new consumers and they along with consumers in Brazil, Russia, Turkey, the UAE, Egypt, Mexico, Poland and many other emerging markets are becoming an important force in world consumption. Despite the current political volatility, we have liked Turkish investments for some time, because we are able to find there plenty of well-run companies operating in a growing domestic market. Returns on capital are high, valuations are low, and the country’s economy is moving closer to the European Union.

In emerging markets in general, we will continue to focus on energy, telecom, transportation and banks.

Where To Avoid

GN: Which countries should be avoided at present as far as investment in equities is concerned?
MOBIUS: …we have minimal exposures to markets such as the Philippines and Chile due to size and liquidity issues. In the case of the Philippines, the country’s high fiscal deficit and poor corporate governance practices also raise concerns. We believe that acceleration in the implementation of financial, economic and structural reforms is vital to tackle the country’s problems. The government also needs to clean up the country’s widespread corruption and nepotism problems. We have just returned from a trip to the Philippines and found a much improved investment environment. However much still needs to be done. We exited Venezuela as soon as Chavez came to power since we saw the potential risks.

Natural Resource Sector

GN: Do you think the present bull market in natural resources has a chance to last and if yes, which natural resources will increase the fastest? Do funds managed by you take advantage of the natural resources bull market and if yes, then which specifically and how?
MOBIUS: Coming back to commodities, our funds have lots of exposure to commodities-linked companies that are benefiting from high prices and high global demand, including Vale do Rio Doce in Brazil and Gazprom in Russia. We also have exposure to the rapid rise in Chinese oil demand, through Petrochina.

In general, Russia is a big commodity play. The big run-up in the market prices of some of our Russian oil and gas holdings has automatically resulted in Russia accounting for a larger share of some of our portfolios than before. We are conscious that the Russian stock index is exposed to a correction in energy prices, but the Russian commodity-related stocks in our portfolio will continue to make good profits and record substantial margins, even allowing for price corrections.

In general, we remain optimistic about the energy sector because of geopolitical and short-term constraint reasons. While we do not project the average crude oil prices to maintain their recent lofty levels, demand growth still looks strong and makes the tight supply and demand situation even tighter.

Source:

“Where to make your stock market moves?”
Gulf News (UAE), June 14, 2008

Legendary emerging markets investor Mark Mobius talked about India’s investment outlook in the Business Standard (India) on Friday. According to the publication:

Indian markets will benefit from the robust savings pool and will remain partially insulated from a US slowdown due to the country’s lower export contingency on US, says Mark Mobius, the 71-year-old investment guru and executive chairman of Franklin Templeton Investments.

While China’s export and investment-led growth will lead to overcapacity in many sectors, India will remain shielded in being a domestic consumption-led story.

“India is also expected to record sustained economic growth in the future. The country is a good example of where entrepreneurship has taken hold of the economy, and where the private sector is thriving despite bureaucratic red tape and poor infrastructure”, says Mobius.

So, what is Mobius looking look at these days? According to the Business Standard:

On his best bets among sectors in India and China, he says consumerism remains a major investment theme with higher incomes resulting in greater demand for products and services.

“We maintain a positive view on energy, materials, consumer and infrastructure sectors in these markets. Energy stocks should continue to benefit from greater revenues and earnings as a result of high oil prices and greater global energy demand”, says Mobius.

China and India continue to invest heavily in infrastructure development, which should benefit companies in this sector, he says.

Source:

“India’s markets will benefit from robust savings
pool: Mobius”
Business Standard (India), June 6, 2008