Templeton exec expresses optimism on emerging markets


CNA

TAIPEI — Mark Mobius, executive chairman of Templeton Asset Management’s emerging markets group, had an optimistic outlook on the global economy Tuesday, especially emerging markets. “The best time to invest (emerging markets) is when you have money,” said Mobius, dubbed the “father of emerging markets funds,” at a seminar aimed at promoting such funds in Taipei. Despite the global economic slowdown, the economic growth rates of Europe and the United States had seen some gains and emerging markets were projected to have faster growth, Mobius said.

Citing August forecasts by the Economist Intelligence Unit, the Templeton executive said China and India, two emerging markets, are expected to grow 9 percent and 7.9 percent, respectively, in 2011, while growth in the U.S. and Japan was estimated at 1.7 percent and -0.5 percent. Mobius said the price-earnings ratio of emerging markets is about nine at present, fairly low in the range between the all-time low of seven and all-time high of 28, according to statistics. While many experts warn that investing in emerging markets may carry substantial risk, Mobius did not address the issue. But he observed that emerging markets tend to have relatively long bull markets with big increases and relatively short bear markets with small decreases.

Since 1988, there have been three bear markets: the Asian Financial Crisis in 1997-1998, the dot-com boom and bust in 2001 and the subprime crisis in 2008. During that time, bull markets lasted an average of 69 months and rose an average of 423 percent, while bear markets lasted an average of 14 months and lost an average of 57 percent.

“Nobody knows when there is a bull or bear market, but we do know that bull markets last longer,” Mobius said. “So your chances of being in a bull market are better than being in a bear market.”