Mobius: EMs Offer Safety — If You Diversify

Templeton Asset Management’s Mark Mobius continues to say that emerging markets should be a safe haven for investors, but he stresses that a diversified approach to EMs is key.

“A whole picture globally is that emerging markets will be the safest play,” Mobius tells The Economic Times. “Why? Because they are growing at three times faster than the developed countries, their debt to GDP levels are lower, their foreign exchange reserves are higher.”

But, he adds, “you cannot really pinpoint whether it is going to be Brazil or Turkey or Thailand” that lead the way. “You have got to be diversified among these various countries because you can have volatility from one to the other.”

Mobius says his firm generally recommends having 40% to 50% of a portfolio in Asia, with the rest scattered over Latin America, Africa and Eastern Europe. “I think it will stay that way because Asia is a bigger area in terms of market capitalisation and economic size and so forth and of course the Asian countries are growing very faster,” he says.

Mobius also says he expects commodity prices to trend upward over the long term but with volatility. “We expect oil prices $130, $80 up and down, so forth,” he says.