Barack Obama and Republican leaders in the House of Representatives are in a deadlock over how to raise the US debt ceiling. As the deadline of August 2 fast approaches, the IMF has warned of a "severe shock" to the world economy if the US runs out of cash to pay its bills.
Emerging market guru Mark Mobius, the Executive Chairman of Templeton Emerging Markets believes the Republican stance reflects the need to reduce US debt. However, he adds, the solution to the US crisis is unlikely in the short-term. "The market has discounted the lack of agreement on the debt ceiling," he said adding that the US debt downgrade has already been priced in.
Mobius sees resumption of the rally in emerging markets. "I see more diversification away from US treasuries and the US dollar," he said. Also read: US debt crisis: What to expect?
The only hindrance, he said, is the IPO activity. "Last year we had an incredible amount of IPOs coming
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