Emerging markets veteran Mark Mobius believes India is still in a position to prosper despite the horrific incident that took place this week in Mumbai. Bloomberg’s Rishaad Salamat and Pooja Thakur wrote earlier today:

India’s first terrorist attack against foreigners has done nothing to dent Mark Mobius’s confidence in the stock market of the world’s second-fastest growing major economy.

Mobius, executive chairman of San Mateo, California-based Templeton Asset Management Ltd., says any stock declines may be short-lived as India’s economy is still “vibrant” and the Bombay Stock Exchange Sensitive Index is valued near the cheapest level on record relative to profit…

“It’s a fast-growing economy and we can’t allow this kind of incident to sway our decisions regarding where we want to invest,” Mobius, 72, said in a Bloomberg Television interview from Hong Kong. “India will rise from this and prosper.”

Source:

“Mobius Still an India Bull After Attacks; Sensex Rebounds”
Rishaad Salamat, Pooja Thakur
Bloomberg, November 28, 2008

Jim Rogers appeared on the “Money for Breakfast” show on the FOX Business Network yesterday. The CEO of Rogers Holdings was firing on all cylinders as he sat down and talked with Alexis Glick about the problems facing the U.S economy. Rogers warned viewers:

This is a mess developing. Please understand that. If you’re not worried, you should be worried.

After the interview, the Singapore-based investor participated in a roundtable discussion with other notable financial personalities. During this part of the show, Rogers predicted:

We’re ready for a rally. I mean, the market in October and earlier this month has had a huge selling climax. I covered a lot of my shorts. Who knows if I’m right or not. But I expect the market to rally for some time. It may rally into next year. But… this is a false rally. It’s not going to be great. It’s not the end of the problems in America and it’s not the end of the bear market.

I highly recommend watching the interview and subsequent discussion, which can be found here on Alexis Glick’s blog “The Glick Report.”

Source:

Jim Rogers Interview
FOX Business Network, November 25, 2008

Legendary investor Marc Faber appeared on Bloomberg yesterday, where the Swiss money manager who became famous for calling the 1987 U.S. stock market crash shared his latest U.S. economic outlook and investment strategies. Notable excerpts from the discussion included:

The dollar will go down. So the investor has to be very careful to be in assets that will actually appreciate in both foreign currency terms and in dollar terms. And if I look around the world, in my opinion, the most precious asset going forward will still be gold…

I only buy physical gold, because I don’t trust derivative products, I don’t trust ETFs, and I advise every American to hold this gold outside of the United States.

The editor of the monthly investment newsletter The Gloom Boom & Doom Report also talked about other investment opportunities. Dr. Faber said:

Well, I think that the gold mining shares, especially the exploration companies, have been hammered, and so a rebound, a very strong rebound, could occur there as well. I also think that corporate bonds market, especially lower-quality bonds around the world, have built up huge spreads vis-à-vis Treasuries, and so the corporate bonds market, actually, for my taste, would seem to be more attractive than equities.

When asked by Bloomberg whether or not the stock market rally could continue, the investment adviser and fund manager offered this advice:

Well, I think we can rally further because world-wide governments are really injecting liquidity through fiscal measures and monetary measures into the system. And then everything goes up, but some things go up more than others. And as I said, I think that precious metals are attractive because every responsible individual in this world must know— central banks have become asylums for economists that have turned insane. And in their insanity, they became money printers. And so you have to be your own central bank. You cannot trust the central banks of our governments anymore…

I think you can trade this rally here in index futures, ETFs, in physical commodities, precious metals, and so forth. But at some point, in January to March of next year, you have to get out because the global economy is imploding. I’m repeating— imploding. And there’s not going to be a recovery despite all the government interventions.

FREE VIDEO: Is gold the last store of value?

You can view the 8 minute 17 second Bloomberg segment here.

Source:

Marc Faber Interview
Bloomberg, November 25, 2008

Emerging markets legend Mark Mobius believes that investors who have their money tied up in safer assets during the financial crisis will eventually move their funds into emerging markets in the quest for better returns. Mobius, the Managing Director of Templeton Asset Management, was interviewed Tuesday by CNBC Asia. From the exchange:

CNBC: I know you have a lot of expertise in the emerging markets area and I wondered given how much the US rallied over night, Asia didn’t quite follow suit to the same degree. Is the risk appetite for emerging markets asset still pretty weak out there even though we are seeing some base building?

MOBIUS: That’s right. The spread between emerging markets debt interest rates and US Treasury is still quite high, although it has come down from its high point. That indicates that the confidence in emerging markets is still not there. There is no reason why it should be and given the fact that the US is in such dire financial situation and that’s lapped over into the rest of the world. But we see going forward as people begin to move out of US treasuries, as they begin to realise that the valuations in emerging markets are so good, one is going to see that move out into the emerging markets…

CNBC: Is that because, in the western world and Japan, we are moving to an effectively zero interest rate policy and at that point investors are going to look at what they are getting on — their bond investments will say: we are not getting anything here, so let’s look about?

MOBIUS: Exactly. Investors will realise at one point: I am getting 1% or less with US treasuries and I can get 5–8% dividend yield on emerging market stocks. In addition to that fact that as people retrieve from the US dollar — because until now they had put everything into US treasuries — you will see the emerging market currencies begin to rebound again because some of them are undervalued.

Source:

“Valuations will drive investors back to EMs: Mark Mobius”
Moneycontrol.com (India), November 25, 2008

Legendary investor Jim Rogers appeared on Bloomberg yesterday, where he discussed the future of the U.S. dollar and his investments. Bloomberg’s Ron Harui and Mike Schneider wrote earlier today:

The U.S. dollar will be “devalued” as policy makers seek to weaken it, undermining the greenback’s role as an international reserve currency, said Jim Rogers, chairman of Rogers Holdings in Singapore.

“They think that if you drive down the value of your money, it makes you more competitive, now that has never worked in history in the long term,” said Rogers…

The dollar is “going to lose its status as the world’s reserve currency,” Rogers said yesterday in a televised interview with Bloomberg News. “It will be devalued and it will go down a lot. These guys in Washington, they want to debase the currency.”

Even though the former partner of George Soros in the legendary Quantum Fund predicts the dollar will be devalued, the U.S. currency has benefitted from the recent turmoil in the global financial system. The greenback has advanced against 15 of the 16 most-traded currencies since the end of June 2008. And the rally could continue for some time. Harui and Schneider wrote:

Rogers predicts the U.S. currency’s rally “will probably go into next year” and said he plans to cut the remainder of his dollar holdings during this period.

“If I were doing it today, and what I have done today, is buy the yen,” Rogers said. “But, it is also an artificial move that’s going on. It’s a difficult problem to find out what is a sound currency.”

In addition to buying Japanese yen, Rogers told Bloomberg News he is buying commodities, claiming that their “fundamentals have not been impaired and, in fact, are improved.” From the piece:

“In mid-October, I started buying commodities, I started buying China and I started buying Taiwan,” he said. “I bought them all, but I’ve been focusing more on agriculture. I mean sugar is 80 percent below its all-time high. It’s astonishing how low some of these prices are.”

Source:

“Rogers Says Dollar to Be `Devalued,’ Buys Commodities (Update2)”
Ron Harui, Mike Schneider
Bloomberg, November 25, 2008

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

Billionaire investor George Soros told a German publication that the U.S. economy requires hundreds of billions of dollars in additional bailout funds to successfully weather the ongoing financial crisis. Reuters’ Kerstin Gehmlich wrote Saturday:

The U.S. economy needs additional support measures of between $300 billion and $600 billion to help it withstand the financial crisis, U.S. billionaire investor George Soros was quoted as saying by a German weekly.

Soros, one of the world’s first and best-known hedge fund managers, told Der Spiegel magazine the United States needed an infrastructure programme, as well as a large economic stimulus package to provide its cities and states with sufficient cash.

“It has exceeded my most daring expectations,” Soros told Spiegel weekly in an advance copy of an interview due to be published on Monday.

He was referring to the scale of the international financial crisis.

Unlike his former partner in the Quantum Fund, Jim Rogers, the Hungarian-born investor believes that U.S. President-elect Barack Obama is capable of rescuing the American economy. Gehmlich noted:

Soros said he had high expectations of the ability of President-elect Barack Obama to take appropriate measures.

“The duration of the crisis depends on the success of his policies,” Soros said, according to Der Spiegel. “I have high hopes on Obama.”

Despite the carnage in the global financial markets, Soros Fund Management has been pouring funds into energy-related investments. MarketWatch’s Steve Gelsi wrote this morning:

Consol Energy (CNX) rallied 15% to $23.92. Peabody Coal (BTU ) rose 13% to $21.28. Arch Coal (ACI) jumped 12% to $13.80 on Monday. Public filings disclosed investments in these and other coal producers. Soros Fund Management LLC, the investment arm of billionaire George Soros, bought 2.9 million Arch Coal Inc. shares in the last quarter, according to a 13F filing.

This latest action by Soros in the energy sector follows his investment in “food friendly” ethanol company Qteros and an increase in his stake of Brazilian state-run oil company Petroleo Brasileiro (PRB) to 21.1 million American Depositary Receipts as of September 30 from 11.5 million back on June 30.

Sources:

“Soros says U.S. needs billions more in aid measures”
Kerstin Gehmlich
Reuters, November 22, 2008

“Coal producers rally as investors wade in”
Steve Gelsi
MarketWatch, November 24, 2008

Legendary emerging markets investor Mark Mobius thinks that the attraction of U.S. dollars and Treasuries will start to wane. From the CNBC website yesterday:

Despite continued woes in the U.S. economy, the greenback has seen an unexpected surge against currencies around the world.

As investors become ever more risk averse, emerging markets are bearing the brunt of a flight to safety.

But Mark Mobius, executive chairman of Templeton Asset Management, sees a reversal around the corner.

“As everyone is rushing into US Treasurys, they need U.S. dollars to do that and have therefore sold everything in sight,” Mobius told CNBC.

“This is why emerging markets have gone down, why commodities have gone down. as everyone is moving into dollars.”

But Mobius said that “as US Treasury rates go down to 1 percent or below you will see the attraction of US Treasurys waning.”

Mobius also believes that emerging markets have learnt a bitter lesson since the Asian Crisis of 1997-1998.

“One big lesson was ‘don’t borrow in a currency you are not earning in’,” he said.

Source:

“Appeal of Dollar, Treasurys Can’t Last: Mobius”
CNBC, November 20, 2008

FREE VIDEO: How low can the Dow go?

Marc Faber appeared on CNBC this morning and said that a “very strong” rebound in asset markets was possible within the next 3 months. The Swiss-born investment adviser and fund manager told viewers:

Well, I think we have reached extreme points in the sense that asset markets are, by and large terribly oversold, whether these are gold mining shares, or commodities, or equities. On the other hand, we have an overbought U.S. dollar and overbought U.S. Treasury bonds. So I think that volatility will continue. But what you could get within the next 3 months is a very strong rebound in asset markets, in equities, and a sell-off in bonds, and eventually a selloff in the dollar.

In the meantime, the editor of the monthly investment newsletter The Gloom Boom & Doom Report is partial to gold. Dr. Faber said:

I still like gold simply because it’s a cash that is not the liability of someone else. What disturbs me a little bit about gold, near-term, is that it’s one of the few assets that has held up very well. And, if you get a very strong rebound in equity markets it is conceivable that people will then sell assets that have held up well and part their money in distressed assets. In other words, in U.S. stocks, in emerging market stocks, and ? There’s one sector in the gold sector which has sold off very dramatically. These are gold mining exploration companies. They are at extremely depressed levels, and I would imagine that even if the gold price went down somewhat, these exploration companies could actually rally.

You can watch the 10 minute 49 second interview here.

Source:

Marc Faber Interview
CNBC, November 21, 2008

Legendary investor Jim Rogers talked to some British financial publications recently about his latest investment outlook. On Tuesday, the transcript of an exchange between the former partner of George Soros and the Financial Times (UK) appeared on their website. Rogers indicated that he was bearish on the U.S. dollar, going so far as to warn that it might be a “doomed currency.” From the interview:

FT: It’s a year since we last interviewed you. You were aggressively bearish about the dollar, but you thought there would probably be a rebound and you would take that as an opportunity to get further out of the dollar. Have you made a further exit from the dollar?
JR: Not yet, no. And the reason I haven’t is because we’re in a period of forced liquidation of everything. We’ve had only eight or nine periods like this in the past 150 years, where everybody has to reverse their positions on everything. There is a gigantic short position in the dollar and they’re all having to cover as they reverse their positions, so this rout is going to go on much further than I would have expected - to my delight, because then I’ll get to sell at higher prices. I don’t know whether I’ll get out this month or this year even - maybe next year, but I do plan to get out of the rest of my US dollars, because this is an artificial rally caused purely by short covering.
FT: How will you tell when that deleveraging is finally over?
JR: I’m sure I won’t get it right, but I do hope that when there’s a lot of euphoria about the dollar and everybody’s saying, well, see, there’s no problem with the dollar . . . I hope I’m smart enough to recognise it and finally get out of the dollar, because it is a flawed and, maybe, even doomed currency.

The CEO of Rogers Holdings continued to talk about the greenback in a piece by Eoin Gleeson that appeared on the MoneyWeek (UK) website yesterday. Gleeson wrote:

What should investors do about it? “Bet against the dollar. And bet against long-term US bonds as well”. With a wave of corporate defaults likely this year and America’s debt problem spiralling out of control, any rally in the greenback and the US economy this year will be short-lived, he reckons.

The Singapore-based investor also talked about an asset class he knows very well. From the piece:

So what about Roger’s beloved commodities? They’ve taken a pounding along with other asset classes. Well, commodities have collapsed because we are in the midst of a global sell-off of everything, says Rogers. But the recession is only going to make the long-term bull case for commodities even stronger.

With miners struggling to get their hands on loans, they are not going to be opening too many new mines over the next year. It’s the same for farmers. And that means, just like in the thirties and the seventies, that commodities will rebound a lot quicker than shares, and this time they will continue to rise for another 10 to 15 years. “Even if commodities fall for a year or two, it’s not the end of the bull market,” he recently told Resource Investor. So what does he recommend?

“Buy gold, cotton and sugar”. Keep an eye on African oil stocks, - particularly in Angola, which will soon surpass Nigeria as the continent’s largest producer of oil. And, he tells Investors Chronicle, he’s keeping an eye on Taiwan. “I’m just sitting and watching because during this period of forced liquidation, some of these emerging markets are going to go down by more than they should simply because they went up by more than they should have.”

Rogers went into greater detail about emerging markets during his discussion with Investors Chronicle (UK). Jonathan Eley wrote Wednesday:

China is the only emerging market in which he has remained invested recently. “I had sold out of all other emerging markets… because there were all these MBAs on airplanes flying round the world looking for new emerging markets. They were all being over-exploited.”

Yet, Rogers is still keeping an eye out for opportunities. Eley wrote:

What’s on his watchlist? Taiwan is one new candidate. “I’ve never bought Taiwan before in my life, but there is peace now,” he says, referring to the frequent tension between China and its small nationalist neighbour in the past.

He believes that the two Koreas will be unified far sooner than many people think, and points out that despite its vile regime, Myanmar is also starting to open up. “It’s got 70 or 80 million disciplined, educated people, lots of natural resources, and it sits right between India and China. What better location is there than that?”

Outside of Asia, the co-founder of the legendary Quantum Fund thinks Africa has some possibilities. From the piece:

What about Africa, I ask? “There are huge opportunities in Africa. If there were six of me, two of me would be in Africa now. Angola is going to be the largest producer of oil in Africa sometime within the next year or two, overtaking Nigeria. Tanzania is making dramatic changes, too”.

Kilimanjaro Hotel Kempinski Dar es Salaam, Tanzania

Sources:

“The dollar is a flawed, maybe even doomed currency”
Jim Rogers
Financial Times (UK), November 18, 2008

“What Jim Rogers thinks you should buy now”
Eoin Gleeson
MoneyWeek (UK), November 19, 2008

“Jim Rogers on emerging markets”
Jonathan Eley
Investors Chronicle (UK), November 18, 2008