 "Too early to buy emerging market stocks amid rout, says Mobius")
Mark Mobius says investors should hold off from buying developing nation shares as a rebound from six-year lows will be shortlived amid widening price swings.
"We have a little bit to go before we see stabilisation, but volatility will remain," Mobius, chairman of the emerging markets group at Franklin Templeton Investments, said in an interview with Bloomberg Television. "We are sitting on cash." The MSCI Emerging Markets Index climbed 1.8 per cent at 9:52 am in London, halting a seven-day, 11 per cent decline. At least fifteen of the 30 largest equity markets among emerging economies have extended losses from their peaks to 20 per cent or more, fulfilling traders' definition of a bear market. A gauge of 50-day volatility on the index climbed to its highest level since 2012 on Tuesday.
Investors should wait for markets to stabilise instead of rushing to buy, Mobius said. Chinese policy makers could use monetary and fiscal policies, including easing banks' reserve requirements, to boost equities, he said.
The Shanghai Composite Index sank 7.6 per cent on Tuesday, extending its worst four-day loss since 1996, amid concern policy makers have abandoned market support measures.
China's shock devaluation of the yuan this month has sent convulsions through financial markets, fuelling speculation the slowdown in the world's second-largest economy may be deeper than previously thought. The rout has driven gauges of volatility to multi-year highs and sent bond yields tumbling as investors wound back bets that the US central bank will begin raising interest-rates as soon as next month.
"People are so pessimistic and so much money has been withdrawn that sellers are forced to sell," Mobius said. "Don't get excited, take a few days off, wait for the market to stabilise, then come in."
"We have a little bit to go before we see stabilisation, but volatility will remain," Mobius, chairman of the emerging markets group at Franklin Templeton Investments, said in an interview with Bloomberg Television. "We are sitting on cash." The MSCI Emerging Markets Index climbed 1.8 per cent at 9:52 am in London, halting a seven-day, 11 per cent decline. At least fifteen of the 30 largest equity markets among emerging economies have extended losses from their peaks to 20 per cent or more, fulfilling traders' definition of a bear market. A gauge of 50-day volatility on the index climbed to its highest level since 2012 on Tuesday.
Investors should wait for markets to stabilise instead of rushing to buy, Mobius said. Chinese policy makers could use monetary and fiscal policies, including easing banks' reserve requirements, to boost equities, he said.
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"If regulators allow banks to put money into markets, then there's quite a message," Mobius said.
The Shanghai Composite Index sank 7.6 per cent on Tuesday, extending its worst four-day loss since 1996, amid concern policy makers have abandoned market support measures.
China's shock devaluation of the yuan this month has sent convulsions through financial markets, fuelling speculation the slowdown in the world's second-largest economy may be deeper than previously thought. The rout has driven gauges of volatility to multi-year highs and sent bond yields tumbling as investors wound back bets that the US central bank will begin raising interest-rates as soon as next month.
"People are so pessimistic and so much money has been withdrawn that sellers are forced to sell," Mobius said. "Don't get excited, take a few days off, wait for the market to stabilise, then come in."