Foreign investors cautious after IL&FS crisis, but long-term outlook positive: Mark Mobius

Veteran emerging markets Mark Mobius has flagged the Infrastructure Leasing and Financial Services (IL&FS) crisis a key concern for foreign investors.

According to a Mint report, Mobius stated that the government’s efforts to stabilise the company suggest to investors that other such companies in India are also operating on a heavy leverage.

The rise in interest rates in the United States also implies a ripple effect, and that other countries are expected to raise interest rates, said Mobius. Such events are making investors very cautious.

Mobius also noted that these are short-term trends, and that the long-term outlook towards investing in India is still highly positive. This was why Mobius stated that Indian investments will be a big part of his venture’s new portfolio.

Mobius sees an opportunity in capturing the market share in the financial sector, particularly Non-banking financial companies (NBFCs) and export companies that have a strong balance sheet. Oil dependent companies. Mobius also sees interest rates rise in India anywhere between 0.5 to one percent by the end of this year.

He also expects the rupee to stablilise to 73 against the dollar, and sees crude oil to be touching $100 a barrel by the end of the year, even going as high as $120 per barrel later.

Mobius stated that in this current climate, he is wary of companies dependent on oil, as well as those with a weak balance sheet.