Southeast Asian stocks are still not expensive, says Mark Mobius

Says southeast Asia is benefitting from the growth of China and increasingly from the growth in India

Southeast Asian shares, some of the priciest in developing nations, still offer good value and political worries about the region are "overdone," according to Mark Mobius.

"They're not really expensive in the environment that we're in now," Mobius, executive chairman of Templeton Emerging Markets Group, said in a live interview on Bloomberg's Facebook page at the Bloomberg Markets Most Influential summit in Hong Kong. "Southeast Asia is benefitting from the growth of China and increasingly from the growth in India."

The 12-month price-to-earnings ratio for the MSCI South East Asia Index has risen from this year's low of 12.5 in January to a 16-month high of 15.2 in August amid a rally in emerging-market assets. It was 14.9 on Wednesday, against 12.5 for a measure of developing-nation equities.

Foreign investors pulled money from the Manila bourse for 24 straight days through Tuesday amid concern that Philippine President Rodrigo Duterte's abrasive style is deterring investors, while in Indonesia a disappointing tax amnesty has contributed to outflows. Investors are still pumping money into Thai equities even amid uncertainty over the health of the 88-year-old king, who has been a source of political stability throughout this reign.

No downside

"There are individual problems in each of the countries," said Mobius. "There's concern about Duterte in the Philippines, which I think is overdone. There's concern about reforms in Indonesia and the political environment in Thailand. I don't see downside anywhere."

Foreign funds have pulled $351 million from Philippine shares this month and $300 million from Indonesia, while adding $525 million to Thai equities, exchange data show. While they've come off highs reached in July or August, most of the region's main share gauges are still up for the quarter. The Jakarta Composite Index advanced 7.5 per cent, the SET Index rose three per cent and the FTSE Bursa Malaysia KLCI Index rose 0.8 per cent. Only the Philippine benchmark measure has fallen, dropping 2.8 per cent.

"I like the consumer sector in Southeast Asia because per capita incomes are going up," said Mobius. "On a selective basis, I like technology."