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Mark Mobius bullish on BRIC market

(China Daily/Agencies)
Updated: 2009-11-20 08:08

Emerging markets fund manager Mark Mobius has said stocks in Brazil, Russia, India and China are likely to rise by 30 to 40 percent within three to four years as higher economic growth and lower government debt spur corporate earnings.

Mobius, chairman of Templeton Asset Management Ltd, said he's increasing holdings in all emerging markets, with particular focus on the four biggest developing-nation economies collectively known as the BRICs.

"BRIC countries are really at the top of our favorite holdings", Mobius, who oversees about $25 billion of emerging-market assets, said in an interview at the sidelines of a press conference in Istanbul yesterday. "You can see BRIC countries have been best performing."

Russia's RTS Index has surged 135 percent this year, the biggest gainer among 89 equity gauges worldwide, and Brazil, China and India rallied more than 75 percent as the global economic recovery spurred demand for commodity exports. While developed countries may shrink 4 percent this year, emerging markets as a whole may avoid a contraction with zero change in gross domestic product, Mobius said.

While a "sudden violent correction" is likely in a bull market, investors should be "ready to buy", Mobius told reporters.

The biggest growth areas in emerging markets are in the consumer and commodity industries, with China and Brazil offering among the cheapest stocks worldwide, Mobius said.

The MSCI Emerging Markets Index has more than doubled from its low point in March and gained three times more this year than the Standard & Poor's 500 Index of US stocks, climbing 73 percent.

The MSCI gauge of 22 developing countries added 0.1 percent to 981.79 as of 5:02 pm in New York on Wednesday. The index is valued at 20 times reported earnings, according to data compiled by Bloomberg.

The MSCI China Index trades at 17.7 times profit, while the MSCI Brazil Index is valued at 18.2 times earnings. That compares with a price-earnings multiple of about 30 for the MSCI All Country gauge of developed and emerging economies. The S&P 500 is valued at 22 times profit of the companies in the index.

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Templeton has about $2 billion invested in the four BRIC economies, Mobius said.

Mobius was attending a conference in Istanbul where Templeton and Akbank TAS, the Turkish bank part-owned by Citigroup Inc, said yesterday they are offering a fund covering BRIC nations to Turkish investors.

Turkish assets aren't "extremely expensive", Mobius said. Templeton has $800 million invested in Turkey, mostly in banks, petroleum and consumer stocks, Mobius told reporters. "We are constantly looking" for new stock offerings in Turkey, he said.

The country's ISE National 100 Index fell 1.7 percent to 46,419.87, valuing the gauge at 14.6 times reported profit.

Mobius said he's buying bank stocks in Thailand and technology companies in Taiwan. Among so-called frontier markets, countries including Vietnam, Kenya and Nigeria are "very interesting now", he said.