Mark Mobius, Templeton's emerging markets guru, has answered questions posed by readers of the Financial Times.
Asked what geopolitical flashpoints he saw impacting emerging markets in 2007 and beyond, Mobius replied:
The flashpoints would be as follows:
- A dramatic change in political direction in any of the major emerging markets such as Russia, China, India Brazil, S. Africa, Turkey etc where the government turn their backs on a market economy model and continued liberalisation. This of course will cut the fund flows into those markets and will result in slower economic growth overall.
- Continued presence of the US in the Middle East and, more critically, an increase in that presence without the cooperation of European and other allies.
- Slowdown of the U.S. economy and therefore a slowdown in US imports.
- Rising protectionism globally.
Mobius says his funds are most heavily invested in South Africa, Korea, Taiwan, China and Turkey. When asked how he would invest $10 million today, Mobius said he'd invest it the same way he's investing the $33 billion his team is currently putting to work. I could never say he's lying, because he may well spend the $10 million on many of the same name his funds hold now. But, gosh, it must be easier managing the smaller amount. Not to mention having more small cap names available.
I've read a good bit lately on China investing in Africa. Mobius was asked about this:
I’m now in South Africa and the word here is that Africa is benefiting from a surge of Chinese foreign direct investments. The Chinese are paying a great deal of attention to Africa. The Chinese Prime Minister visited Africa over eight times in the last year.
This is an indication that China is going to be more and more active in this part of the world. The have already done 16 investment deals worth $1.9bn in addition to $3bn in preferential loan concessions. Also $2bn in buyers credits. They have targeted $100bn in bilateral trade by 2010.
In all, an interesting Q&A with an interesting guy. If you subscribe to the FT I encourage you to read it all.
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