Mark Mobius, who oversees about US$26 billion in emerging-market stocks at Templeton Asset Management Ltd, said he planned to buy more shares of consumer and commodities companies in emerging markets.
“Valuations are attractive,” Mobius, Templeton’s executive chairman, said at a briefing in Kuala Lumpur yesterday. “We feel that this year would be a year of recovery of the stock markets in the emerging markets.”
Mobius said rising income in China, India and other parts of Asia would spur spending on consumer goods, while commodity prices are now “too low.”
The two nations, Brazil, South Africa and Turkey offered the best investment opportunities, he said.
“There is an incredible build-up of foreign reserves in the emerging markets, and the increase in money supply is quite dramatic,” the executive chairman said. “We’ve seen a very big increase of money coming into markets.”
The MSCI Emerging Markets Index dropped 54 percent last year, the worst performance since the measure was created in 1987, as global credit markets froze. The index has gained 18 percent since reaching a four-year low on Oct. 27 as governments worldwide unveiled spending plans to bolster economies.
The emerging-markets gauge trades at 8.2 times its companies’ reported earnings, 36 percent cheaper than its average valuation last year, according to data compiled by Bloomberg. The developed measure trades for 10.8 times profit.
The US economy and other economies will rebound next year, said Mobius, whose biggest holdings are in Asia.
Central banks from the US to Japan to China cut interest rates last year to revive economies and spur lending after financial companies worldwide reported more than US$1 trillion of asset writedowns and credit losses.