The next “bull-market” rally has begun and there are bargains in every emerging market following a record slump in stocks, Templeton Asset Management’s Mark Mobius said.
The MSCI Emerging Markets Index has jumped 23 per cent since reaching a four-year low on October 27, outperforming the 2.5 per cent drop in the MSCI World Index and 9.5 per cent decline in the Standard & Poor’s 500 Index. Emerging markets made up the 10 best-performing benchmark gauges this year, led by the 26 per cent gain for China’s Shanghai Composite Index.
“You have to be careful not to miss the opportunity,” said Mobius, who helps oversee about $20 billion of emerging-market assets as executive chairman at San Mateo, California- based Templeton. “With all the negative news, there is a tendency to hold back.”
Emerging markets are in “better shape” than developed economies, Mobius said. The fund is looking for companies that are “cash-rich”, have low debt and higher dividend yields, or those that can invest for future growth yet have cash left to pay shareholders, he said.
A company’s participation in derivatives is warning against some stock selections, Mobius, 72, said in a television interview from Hong Kong.
Citigroup analysts Markus Rosgen and Elaine Chu are among strategists who describe recent Asian stock gains as a temporary “bear-market rally”.
“You are going to see a lot of bouncing off the bottom because there’s a tremendous amount of uncertainty in the market,” Mobius said, “But I have a feeling we’re at the bottom and now we’re building a base for the next bull market.”
