17 Jan 2009
Jan. 17 (Bloomberg) -- Mark Mobius, who oversees about $26 billion in emerging-market stocks at Templeton Asset Management Ltd., said he plans to buy more shares of consumer and commodities companies in emerging markets."Valuations are attractive," Mobius, Templeton's executive chairman, said at a briefing in Kuala Lumpur today. "We feel that this year would be a year of recovery of the stock markets in the emerging markets."
Mobius said rising income in China, India and other parts of Asia will spur spending on consumer goods, while commodity prices are now "too low." The two nations, Brazil, South Africa and Turkey offer best investment opportunities, he said.
"There is an incredible build-up of foreign reserves in the emerging markets, and the increase in money supply is quite dramatic," the executive chairman said. "We've seen a very big increase of money coming into markets."
The MSCI Emerging Markets Index dropped 54 percent in 2008, the worst performance since the measure was created in 1987, as global credit markets froze. The index has gained 18 percent since reaching a four-year low on Oct. 27 as governments worldwide unveiled spending plans to bolster economies.
The emerging-markets gauge trades at 8.2 times its companies' reported earnings, 36 percent cheaper than its average valuation last year, according to data compiled by Bloomberg. The developed measure trades for 10.8 times profit.
The U.S. economy and other economies will rebound in 2010, said Mobius, whose biggest holdings are in Asia.
Rate Cuts
Central banks from the U.S. to Japan to China cut interest rates last year to revive economies and spur lending after financial companies worldwide reported more than $1 trillion of asset writedowns and credit losses.
The International Monetary Fund said Nov. 6 emerging and developing countries will expand 5.1 percent in 2009, surpassing global economic growth of 2.2 percent. The IMF has said growth of 3 percent or less is "equivalent to a global recession."
Mobius said he's interested in producers of nickel, gold, iron ore, palladium and platinum.
Templeton is less likely to invest in palm oil companies because there aren't many companies focusing on the business, making it "difficut to get a good pure exposure," he said.
It will continue to invest in India even after a terrorist attack and fraud allegations against Satyam Computer Services Ltd., Mobius said.
The investment manager has sold all its shares in Satyam and didn't lose money because it "got out early," he said. Templeton will no longer invest in Satyam, India's fourth-largest software-services provider, and has bought more shares in the Tata group of companies, Mobius said.
Satyam's stock has tumbled 86 percent since founder Ramalinga Raju said Jan. 7 that he fabricated $1 billion in cash and assets.
