Emerging markets are expected to grow at 5.9 per cent this year against a 1.6 per cent growth rate of the developed markets, said Mr Mark Mobius, Executive Chairman, Templeton Emerging Markets Group, and a veteran of the fund management industry.

Mr Mobius is considered to be one of the leading experts on the emerging markets. According to him, the interest among global investors in the emerging markets will not wane anytime soon; it continues to grow stronger.

The two factors that contribute to this growth in investor confidence are foreign exchange reserves and the low debt in these economies. In terms of foreign exchange reserves, China has the largest share at around $2 trillion, followed by Japan at $1 trillion and Russia at about $400 billion. India's forex reserves, according to the latest data, is around Rs 300 billion and gave returns of about 2 per cent.

Another interesting trend that makes emerging markets a haven for investors is the absence of long bear markets. “Since 1988, emerging markets have only experienced three bear markets and that too of short durations. This means that emerging markets experience long bull markets, which makes it attractive for investors,” said Mr Mobius.

With respect to sectors, Mr Mobius said that the commodities segment held the most promise with most of his entity's investments being in commodity-related stocks. “We like commodities and we think they will continue the run-up and go up. Our biggest single commodity area is, of course, oil, followed by iron ore, copper, platinum, palladium, coal and nickel. Although gas hasn't moved much, we believe that it is destined to move up once oil prices go up.”

But he seemed less than enthusiastic about investments in the India infrastructure sector, calling the companies in that arena “somewhat opaque”.

Gold, according to him, while volatile in the short-term, was on an upward trend, with an increase in jewellery consumption. Inflation, he said, was up globally because of the money supply situation and couldn't be avoided.

While the effects of Quantitative Easing 2 (QE2) are being reviewed, there are already talks of a third instalment of Quantitative Easing. But Mr Mobius said that QE2 itself is far from over and will continue until (US) elections. “It won't be stopping anytime soon. The US treasury will be printing more money. But this will lead to the other economies printing money as well, as they wouldn't want their currency to become more expensive than the dollar preventing exports from their economies,” Mr Mobius said.

Quantitative Easing an unconventional method of stimulating the economy by printing and infusing more money into the economy.

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