China is No.1, India is No. 2 global hot spot: Mark Mobius

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Q: What about Europe - where do you stand on that?

A: Western Europe is the same thing. There are some companies - in fact, we've invested in a Swedish company that's the biggest cosmetics company in Russia - so you have lots of companies that you can look at in the European market but again there are so many other opportunities in Eastern Europe, we just want to stick there.

Q: Let me just come back to that BRIC point once again because the hope in this part of the world is that it is China where people had become excessively pessimistic about but that is the one which will lead a recovery across Asian markets and will be the first to recover this year as well. Do you subscribe to that theory?

A: Exactly. You're seeing numbers all over the place but I personally think their target of 8% - I would 7% to be conservative - but from what I see they are going to be able to achieve that.

Q: Equally this - there is so much talk going around about the kind of stimulus package that China has unleashed which dwarfs anything that we are seeing out of India and of course across many developed markets as well and the construct now seems to be that or the story now seems to be that, that is the one which will lead to a big turnaround in the region?

A: That's an interesting story because Shenzhen where I was just yesterday and I saw things really booming there, what's happened is that of course 10 million workers went home for Chinese New Year, now about 8 million have come back - we are talking about a quarter of million unemployed in that area.

In the context of the billion people, that's not very much and of course everything in China is on a big scale. But we haven't seen the unrest that you would expect. It is pretty disciplined. It doesn't mean that you don't have strikes and demonstrations. Of course, that's going on all the time but [there is] no major problem in that regard and the government is moving very fast.

They are pumping money into the economy at a rapid rate. They have their own stimulus programme, over USD 500 billion is being spent, banks are lending very rapidly, the lending amounts of the banks are doing are very high now. So I think they are going to be moving along and achieving those growth rates.

Q: It is not just China. The whole hope on which the global markets seem to be rising now is that we haven't seen this kind of coordinated government policy action in any crisis in the past and people are sort of betting on that, that the new Geithner plan, the kind of money which is being thrown into the global markets that will eventually work out. Where do you stand on that hypothesis? Do you think this kind of government policy action will eventually lead markets out of their depression?

A: As far as I see, money supply is being pumped into economies around the world - not only in the US but also China, India, you name the country, they are pumping money. Why do they feel comfortable doing that because interest rates are coming down and inflation rates are coming down. So they feel comfortable making these moves to pump money into the economies. In the emerging markets, foreign exchange reserves are at all-time highs, the debt to GDP ratio is very low in these countries. So they're able to pump money in. The fear and I think the big problem that we could have going forward is protectionism.

If Europe, US become protectionists, all bets are off and that would be a bad thing not only for the US and Europe but of course for emerging markets and I am not just talking about exports, I am talking about investment, trade flows, money flows back and forth. This is very important to continue in open society and open trade and investment situation.