Monday, March 30, 2009

"This is the best time to invest" - Mark Mobius
HONG KONG (Dow Jones)--Mark Mobius, executive chairman of Templeton Asset Management Ltd., sees Asia heading into a bull market.

At a time when many other fund managers are sitting on the sidelines, waiting for assurance the markets won't go off another cliff, Mobius isn't hesitating.

"This is the best time to invest, when investors are nervous, pessimistic," he told Dow Jones Newswires in an interview.

"Valuations now are very, very attractive," he said, noting that prices in Asia now at the same level as during the Asian financial crisis. Asian equities are now trading below 10 times projected earnings; by comparison, Asian stocks were trading between 15 and 18 times earnings a year ago.

Already, prices have gone up, he noted. China's benchmark Shanghai Composite Index, which covers both A and B shares listed on the Shanghai Stock Exchange is up nearly 30% so far this year, while the Korea Composite Stock Price Index, or Kospi, is up almost 9%. Bombay Stock Exchange's 30-stock Sensitive Index is up 4% since the beginning of the year. Hong Kong's benchmark Hang Seng Index is still down for the year but has creeped up 8% in the last month.

Mobius, who also likes Latin America, notes that Asia stands apart because of its fast growth, strong corporate balance sheets, and strong government spending.

"The fastest economies are in Asian markets...that economic growth is going to be reflected in stock markets as we go forward," he said. "Asian countries also have pretty good foreign reserves they can use for developing their countries and domestic market." he added.

Within Asia, Mobius has been bullish on China for quite some time. China's government has announced stimulus spending totaling almost US$600 billion in sectors such as transport infrastructure and power, public housing, post earthquake reconstruction and rural infrastructure. Thus far, China's stimulus actions seems to be quite successful, he said, noting strong credit growth and continued improvement in China's Purchasing Manager's Index (PMI) over the last few months. Mobius expects the Chinese economy to grow between 7% and 8% this year.

At the moment, some of his top picks in the populous country include China Mobile Ltd. (CHL) and Industrial & Commercial Bank of China Ltd. (1398.HK), China's biggest bank by assets.

China Mobile, one of the world's largest telecommunications companies, is China's largest mobile operator by subscribers, Mobius said. Average revenue per user is declining as the company moves into more rural areas, but the company is planning to sell more products as more customers sign on for third-generation and fourth-generation wireless technology.

Scale is also an advantage for ICBC, one of China's top banks. Chinese banks in general are doing far better than western financial institutions, Mobius said. Some Chinese banks may hold back on dividends in the current climate, but they have good capital and are increasing their lending activity. Results might not be seen immediately but "down the road we'll see very good results," he said. ICBC has a very extensive retail network which means their cost of funds is low, he noted, adding that he also likes the bank's management.

In the greater China region, Mobius also likes Taiwanese technology firms such as Taiwan Semiconductor Manufacturing Co. (2330.TW). Mobius said he likes the company because it is a well-run fabless chip maker, in a position to benefit from a recovery in consumer spending next year.

Other areas Mobius is eyeing include banks and cement companies in Thailand, and information technology companies in India such as Tata Consultancy Services Ltd. (532440.BY) and Infotech Enterprises Ltd. (532175.BY)

To be sure, Mobius expects Asian markets to "bounce around for a while" but he expects markets to finish up at the end of the year when the economic climate is clearer.

"The key going forward is money supply...once that money gets to investors, once they start lending again, then you will see a real change and that money will find a home." (Source: DJ)

1 comment:

suchita Ambardekar said...

Good post,

But would love to get the list of stocks or sectors he would India as a summary.

Can I give Mark mobius write-up link of this post on my blog ,since it is published by you