The Yul Brynner of Wall Street doesnt spend much time
on his home turf these days. Instead, Mark Mobius, the likable
executive chairman of Templeton Asset Management, bounces
around between the far-flung emerging markets into which he
regularly advises clients of the storied Franklin Templeton
Investments to invest.
Institutional Investor Managing Editor Tracy
Tjaden first tracked down Mobius, who oversees $35 billion in
Templetons emerging markets funds, on his cell phone as
he was traveling along a freshly paved two-lane highway outside
Botswanas capital city, Gaborone. He had just toured a
bustling Chinese-owned shopping center featuring all the
well-known global titles. You see the same supermarkets,
the same brands, reports Mobius, 74, a Massachusetts
Institute of Technology economics Ph.D. The consumer
market globally has become homogenized. The follow-up
interview took place a month later as his day was winding down
Mobius predicts South Koreas GDP will grow 5 percent
this year as its largest companies expand by investing in, for
the most part, other emerging markets. Youre seeing
a lot of Korean companies making acquisitions overseas in order
to succeed quickly. Who are they competing with in these
deals? Rivals from other emerging market countries with deep
foreign reserves that are seizing on the opportunity to snap up
market share. Its true more and more the
emerging markets are going global, and theyre
encountering each other when they get there, Mobius
1 What did the financial crisis teach us about
Everybody was affected, including emerging markets equities.
But what we learned is that emerging markets are much more
resilient they recovered much faster than developed
countries. Another thing is that emerging markets have garnered
more exchange reserves than Western countries. In the past,
emerging markets were always short. Now China has $2.3 trillion
and Russia has more than $395 billion in reserves. They
certainly do not have to ask for aid.
2 Whats the near-term economic
This year we expect emerging markets to grow, on average,
four times more than developed countries, or 4 to 5 percent
versus 1 percent. India and China will be growing at 7 to 9
3 So are big investors shifting more money from the
U.S. and Europe to emerging markets?
Institutional investors are by and large very underweight
emerging markets. The average American pension fund has 2 to 8
percent in emerging markets, but all emerging markets stocks
globally represent 20 percent of the worlds GDP. During
the crisis everybody retreated to what they thought was safe:
U.S. dollars. Then you had this rapid buildup, and a lot of
these institutions were kicking themselves for not staying in.
Now they are thinking, Am I getting in at the top? They have to
start building a program that gets them into emerging markets
at a much higher weighting. To be underweight emerging markets
right now is crazy.
4 How much should investors allocate to emerging
Well over 15 percent. When you travel to these markets you
can feel it the vibrancy and growth. Yes, there are
challenges, but then you look at developed markets like Greece.
Thats what I call a submerging market.
5 What are the hottest emerging markets
Brazil is at the top, then Russia, China and India. But
besides the BRICs: Turkey, Poland and Thailand.