Mobius: Asian Stocks to Outperform Latin America

And the reason will be because of faster economic growth in countries such as China and South Korea, according to Mark Mobius, Templeton's emerging markets guru:

"One of the problems in Latin America is that the growth rate in the economies has not been as fast as in Asia,'' Mobius, 69, said in an interview in Sao Paulo. "The reason for that is the governments' policies.''

Asia's emerging market growth may double that of Latin America this year. The International Monetary Fund's estimate for growth in Asia, excluding Japan, may be increased to 8.0 percent from 6.9 percent, according to a presentation by the fund's Asia and Pacific department yesterday. That compares with a 4.1 percent expansion in Latin America, according to forecasts by the United Nations' Economic Commission for Latin America and the Caribbean.

The Morgan Stanley Capital International Asian region index is up 12% this year, on its way to a fourth yearly increase.

Korea's Samsung Electronics Company is the largest holding in the Templeton Emerging Markets Fund, which rose 31% last year and is one of 29 funds Mobius oversees. South Korea has the largest weighting in that fund, at more than 20%, followed by Taiwan and Brazil, Bloomberg data shows. Mobius manages a total of $22 billion worth of emerging markets stocks for Templeton:

"If you look at the two main countries, Mexico and Brazil you'll find lots of great companies with very fast earnings growth,'' he said. "There's a chance that these markets could still keep on moving ahead.'' Elections across Latin America may bring some volatility to share prices. In Brazil and Mexico, politics are unlikely to erode prospects for stocks, he said.                

Argentina, Bolivia and Peru are "question marks,'' he said. "Argentina is a question mark because the current government has not being doing too well from the view point of price controls and other controls which are not good for the economy long-term.''

Bloomberg reports Mobius as saying further opportunities may be found in Poland, Russia and South Africa. He also states that his team is finding a lot to buy, despite prices having gone up so much.

Mobius said he sees potential in Brazilian banking companies such as Banco Bradesco SA and natural resource companies such as iron miner Cia. Vale do Rio Doce and state- controlled oil company Petroleo Brasileiro SA.

"Provided the government continues to allow to be run professionally and provided the government gradually lifts restrictions on pricing, then the company should do very well,'' he said of Petrobras.

I'm by no means a major investor in emerging market stocks, yet I've always been an interested observer in Mobius' activities. Mostly because he's a value guy in an area populated mainly by players looking for growth and hot markets. Then again, managing $22 billion is A LOT to manage even in the developed world. But hey, there's worse problems to have, right?

P.S. On a related note, news broke yesterday that Franklin Templeton will be rolling out a BRIC fund (Brazil, Russia, India and China) this July in the US. The manager? None other than Mark Mobius. He's already the manager of Templeton's UK-based BRIC fund. Does that make 30 funds he's overseeing?

Comments

[C. Maoxian]

30 funds? No wonder he's bald. ;-)

[Earvin Johnson]

I think Templeton as a whole is in love with South Korea. I own GIM, a global bond CEF. South Korea accounts for about 25% of the portfolio.

[John]

Chairman -- you almost made me spill my drink! Gosh, that cracked me up (though I should have expected it!).

Earvin -- I know a lot of value people have been into South Korea, I even heard Buffett owned stocks there (though it might be in his personal account, my memory is failing me here).

[J Reev]

What do you expect him to say? He manages money for a living, gets paid for assets. I used to hold him and Franklin Templeton in higher esteem, but theie greed has led to mediocre returns for most of his shareholders.

[John]

J,

My post stated he was running A LOT of money, and that makes it tougher to achieve great results. Though Mobius had a great year last year. One thing hurting Templeton on the whole is that a lot of the managers peeled off in the years after Sir John sold the fund family to Franklin. Thanks for reading.