Apr 22, 2013 08:14 AM IST | Source: CNBC-TV18

Oil fall helpful for India; Africa looks attractive: Mobius

Investment guru, Mark Mobius of Templeton Emerging Markets Group in an interview with CNBC's Geoff Cutmore shared his views on the global market situation and observed that better times around the corner.

Investment guru, Mark Mobius of Templeton Emerging Markets Group in an interview with CNBC's Geoff Cutmore shared his views on the global market situation and observed that better times around the corner.

Mobius feels correction crude price is a positive for Indian economy, which has been grappling with a ballooning current account deficit.

"India has got difficulties, but now things are looking better for India because if oil prices are coming down or moderating that will be very healthy for India since they are importers," he added.

Mobius also pointed out that not much talked about market such as Africa might just be worth looking at. "Africa is a fast growing region. Individual countries are doing very well, there are lots of difficulties, liquidity problems, but generally speaking that is very good," he elaborated.

He is bullish on oil rich Middle Eastern countries, Mexico, Columbia, Chile and Turkey.

Below is the edited transcript of Mobius’ interview.

Q: Where do you see all the action right now?

A: Frontier market is where the action is now. Look at Africa; Africa is a fast growing region. Individual countries are doing very well, there are lots of difficulties, liquidity problems, but generally speaking that is very good.

Middle East, the oil rich countries are doing very well because they are putting that money into other industries and certain areas in Asia like Philippines, Vietnam, Pakistan, Sri Lanka, those countries.

Q: The past performer, the south east Asian economies, the Mexico for example, the Turkey they are going to continue to generate good return this year and China, Brazil, India perhaps maybe not so good?

A: India has got difficulties, but now things are looking better for India because if oil prices are coming down or moderating that will be very healthy for India since they are importers. In Latin America, Mexico yes, but Columbia is typically interesting and of course we are always in Chile, we like Chile and Turkey is a dynamic country so they will always be doing well.

Q: It is a domestic demand story rather than an exporting thing?

A: Exactly.

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Q: Why isn't quantitative easing (QE) as it being implemented by the Fed, the Bank of England and now Japan? Why isn't more of that money turning up in China and other emerging markets and driving growth prospects?

A: It is beginning. You are going to see that coming up and what has happened up till now is that money has been gone into the balance sheets of banks in order to strengthen the balance sheet. Now, they are beginning to put this money out and one can see more of that flowing into emerging markets.

Q: It is a step by step process as?

A: Exactly.

Q: Is Japan going to be able to turn around its own economy and in the process reliquify perhaps Europe through purchase of bonds. What is going to be the impact do you think of this big monetary activity?

A: The big impact will first will be revitalization of Japanese industry because the yen getting weaker, they become competitive again, but most important will be that money flowing into south east Asia, into Indonesia, Thailand, India, Philippines so forth also China, but relationships within China and Japan are not as good as they should be, but one is going to see a lot of that flow into Asia.

Q: China's 7.7 percent GDP is not bad, but it is not 8.5 percent or 9 percent. should we be worried that again 7.7 percent maybe too high running through the rest of this year or are we going to see a breakthrough on policy maybe, the renminbi grow, something that is a catalyst for significant change before the end of this year?

A: Seven percent to 8 percent is going to be a range this year and probably in the next few years. The reason why I say that is that the new administration in China is now just getting its game going. Once they get going, one is going to see a lot more investment taking place, a lot more activity in the right areas because they have realised that they have made mistakes in terms of where that money went in the last few years. So, that growth is going to continue and we are very bullish.

Q: You remain bullish on China. What would you buy in China and how would you buy it?

A: Anything to do with consumers because the whole push of the Five Year Plan is to get the consumption up in China and make sure that domestic consumption story grows. Once the banks get their balance sheets in order, the banks will be attractive because its consumer banking and commodities companies mainly oil companies because they are consumer led to some extent.

Q: The investor who held his nose if you like and bought in the third quarter last year has done phenomenally well if they held their nerve up to where we are today - we are starting to see some industries rollover and that's being lead by the Dow and the S&P, which have hit new all time highs here. Would you put fresh money to work in equities on a short-term view at this stage or would you wait and see if we get more of a shakeout through the summer?

A: I wouldn't wait. I would put money in continuously now. We know we are in a bull mkt. Bull markets have corrections. Now one has to take that opportunity. Nobody knows how much the correction will be but if you do not invest you could lose out.

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