Europe’s debt problems may be spiralling out of control, but emerging markets fund manager Mark Mobius isn’t worried. He tells Bloomberg that governments around the world will fuel demand for equities by keeping interest rates low.
As a result, the 74-year-old manager of Franklin Templeton Emerging Markets Group is confident that Europe’s problems “won’t drag everyone down” into a recession. “We just don’t see any cause for alarm in the sense of things completely drying up and there being a situation where nobody buys anything”, says Mobius.
It’s a rare voice of optimism, but over the last 40 years Mobius has carved out a solid reputation and now manages more than $40bn of assets. “We don’t see a let-up in demand. Governments around the world continue to pump money into the system and interest rates are low.”
Mobius accepts that the markets “will go haywire” because of Europe but points out that volatility works both ways – shares will move “both up and down”. Moreover, Mobius, who was one of the first mainstream emerging market fund managers, thinks that the carnage has created “great opportunities” in Brazil, Russia and Turkey. In particular he likes banks in those countries that aren’t exposed to the eurozone.
Mobius thinks that the strong performance of emerging economies will also push up the long-term prices for commodities. “The trend is definitely up because there’s worldwide demand for whatever it is. It’s there because of China, India, Brazil. All these big countries that are producing more and more consumer goods are going to need more and more.”