Mobius Buys Beaten-Up Emerging Market Stocks on Recovery Betby
Templeton Emerging Markets Group is buying Chinese stocks “very selectively” and searching for bargains across developing nations on speculation assets will rebound toward the end of the year, said Mark Mobius, its executive chairman.
China is likely to continue efforts to stimulate the economy, while the yuan’s devaluation will be “pretty steady” versus the dollar and “not very big” against a basket of currencies of major trading partners, Mobius told Bloomberg TV on Monday.
Concern about the slowdown in the world’s second-biggest has contributed to an emerging-market selloff and weighed on demand for crude and metals. The People’s Bank of China stepped up efforts on Monday to cushion its economic slowdown, cutting the amount of cash the nation’s lenders must lock away. While developing-nation stocks are heading for their fourth month of losses, the selloff has slowed, with the global benchmark dropping 0.4 percent in February compared with 6.5 percent in January.
“I see a turning point for emerging markets,” Mobius said in an interview in London Monday. “Probably at the end of this year, we’ll see emerging markets emerging again.”
The downturn in countries like Brazil is a “wonderful time to be buying,” according to Mobius, who has just returned from visiting mining companies in Peru and Chile. Strong consumer-oriented companies are a good bet and some commodity producers are becoming more attractive, he said.
Mobius’s comments reflect Franklin Templeton Sealand Fund Management Co.’s strategy in China. Its chief investment officer Lirong Xu said he’s been buying commodity producers as well as so-called new economy companies in industries including education, sports entertainment and movie production.
The firm’s developing-nation purchases don’t constitute “a massive buying program,” Mobius said. “We’re being very cautious.”