Business Daily from THE HINDU group of publications
Saturday, Nov 11, 2006
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Business Daily from THE HINDU group of publications Saturday, Nov 11, 2006 ePaper |
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Markets
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Stock Markets Our Bureau
India is a reasonable market, but in comparison to other emerging markets say China, it is more expensive. You have great opportunities but given the pricing of stocks at current levels one will have to be selective, says Dr Mark Mobius.
DR. MARK MOBIUS, Managing Director, Templeton Asset Management Ltd, Singapore. - Shashi Ashiwal
Mumbai , Nov. 10 Emerging markets guru and Templeton Asset Management Managing Director, Dr Mark Mobius, is looking to explore private equity opportunities in listed and unlisted Indian companies. He, however, maintained that valuations look a bit stretched at current levels. "India is a reasonable market, but in comparison to other emerging markets say China, it is more expensive. You have great opportunities but given the pricing of stocks at current levels one will have to be selective," Dr Mobius told Business Line. Currently Templeton has $3 billion under management in India. They also have a private equity fund. While acknowledging the sharp upswing in corporate India earnings, Dr Mobius said the mitigating factor would be whether the corporates could sustain the earnings growth momentum. According to him, the practice of quarterly reports is cumbersome and could lead to fluctuations. "Quarterly reporting would mean that companies get caught up in the short term and do not think of long term," he said.
India - outlier
Commenting on whether or not India was far more insulated to the `US' factor or from developments in other developed markets, Dr Mobius said traditionally India has been an outlier (one who lies outside) in the sense that when other markets go up, India goes down and vice versa. "However, one has to remember, we are in the global market place and convergence is accelerating in every sphere. As such, India is being drawn more and more into the overall global emerging market economy. "Though impacted by what's happening in the developed countries, it is less so than in China and other countries," he said. According to him, fundamentals look quite good, not only in India but globally despite a slow down in the US. "If you look at the emerging markets, the economic fundamentals look quite good; inflation is down, interest rates are reasonable, foreign reserves are up dramatically, the spread between emerging market debt interest rate and the US treasuries has narrowed," he said.
Volatility on cards
Dr Mobius has, however, forecast some amount of volatility in the near term not only in India but in emerging markets. "The arrival of hedge funds has changed the investment climate. They go where the action is. Hence, one could see some amount of volatility. But one should take the opportunity to enter at these levels," said Dr Mobius. He, cautioned investors to stay invested for the long term. "Be a value investor and do not be swayed by short term. As value investors be choosy and picky," he advised. Dr Mobius said at this juncture, he is bullish on the consumer, commodities and telecom sectors as they continue to offer good prices. He also finds value in the oil and gas sector and in particular integrated oil companies. "Indian companies have tended not to perform well on higher oil prices, but when prices come down, they perform quite well unlike their counterparts in other parts of the emerging world. So there is an example where we can buy a cheaper Indian company, when prices go up because the expectation of earnings is lower," he said. He expects crude prices to slip to as low as $ 50 a barrel.
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