Templeton's Mark Mobius Is Bullish On Emerging Markets

Posted on Star Business, Templeton to invest more in emerging markets

• Monday January 19, 2009
  Templeton to invest more in emerging markets
  By FINTAN NG
  
  It intends to buy shares in consumer and commodities firms
  
  TEMPLETON Asset Management Ltd plans to acquire more shares in consumer and commodities companies in emerging markets due to their attractive valuations and the recovery these markets will make this year.
  
  The asset manager, which is part of San Mateo, California-based Franklin Templeton Investments, manages US$26bil in emerging market stocks.
  
  Templeton Asset Management executive chairman Mark Mobius said the build-up of foreign reserves and increase in money supply, which was “quite dramatic”, would drive the recovery of bourses in emerging markets.
  
  “Banks have been hoarding, inflation is down, interest rates are down … this is unsustainable and will eventually lead to more lending, which means more business actitivities,” he said, adding that stock markets would continue to be volatile in the short term.
  
  Mobius told a media briefing on Saturday that stock markets usually led economies and the economic recovery would only happen next year.
  
  He said China has the wherewithal for economic growth and Brazil, India, South Africa and Turkey were good investment opportunities.
  
  On Malaysia, Mobius said the local stock market tended to be steady but felt that stocks here were not as cheap compared to the region. “We don’t have any plans to increase our holdings but we’re constantly on the lookout,” he said.
  
  Mobius said the focus on consumer stocks was due to the rising spending of consumers in China and India driven by rising per capita income. “Basic consumer products will continue to be sold and companies will continue to be profitable,” he said.
  
  Mobius said commodity prices had “gone too far in both directions” and were too high last year and too low this year. For commodity stocks, he preferred mining-based companies such as those involved in the production of nickel, palladium, platinum and gold.
  
  “We like the food-producing companies to some extent but it is difficult to get a pure exposure to it, even Sime Darby is diversified,” Mobius said.
  
  He said the recent spate of accounting scandals like the one plaguing Satyam Computer Services Ltd would not deter him from investing in India. Templeton exited Satyam without making a loss after its analysts warned it of the company’s suspicious business activities.
  
  “You can’t throw the baby out with the bathwater, there are other companies that are profitable and with good management,” Mobius said.
  
  He said these scandals, including the one involving Bernard Madoff, meant that investors had to be cautious, vigilant and diversified.
  
  “Corporate governance will not be solved by government oversight alone, but we must not be so negative that we don’t invest,” Mobius said.