Saturday, November 18, 2017

Investment News and Commentary from Emerging Markets in Asia - China, India and ASEAN

About discusses business and investment news rising from the geopolitical relations of China and India, and the interactions these two countries have with the rest of emerging Asia.

Mark Mobius Upbeat on Emerging Asia

Burma, Thailand and China all looking good

Feb. 10 – Mark Mobius, the investment guru of Franklin Templeton Investments and a renowned player in asset management, has been waxing lyrically about the opportunities in emerging Asia. Stating that emerging markets are growing four times faster than developed countries, he stated in The Nation that Asia would be immune from any financial crisis as the debt-GDP ratio was very low, forex reserves are high, and interest rates are low, each of which were major factors in protecting Asia from much of the fallout of the Global Financial Crisis.

Mobius stated that investing in Asia is worthwhile because, compared to banks where you are likely to get less than 1 percent interest, in Asian stocks you can achieve a yield of between 3 percent to 6 percent.

He is particularly bullish about Thailand, where he says price-equity levels are currently lower than 2003, and restructuring following last year’s floods is having a positive impact on the economy.

He is also upbeat about the opportunities in Burma, stating that there is “incredible potential” and that compared to Thailand, the country is far bigger. Mentioning that the Burmese currency needs to be stabilized, and that the banking system has to be reorganized, Mobius states that foreign investment would start to enter the country and that some of the bigger Burmese companies would start to list in markets in Thailand and Singapore.

In terms of China, he expects it to achieve growth of about 7 percent to 8 percent for the next two years, and states that Chinese banks are very well capitalized. He is also dismissive of talk of any property bubble in China as he said that although there are a lot of empty buildings, leveraging is not as high as in the United States, and China does not have credit-default swaps or housing derivative instruments. He states that prices will come down, but that demand would still be there.

Regarding ASEAN, Mobius acknowledges that ASEAN companies will start to compete more with China as the region becomes more free trade oriented, and the commerce is increasing significantly throughout the region.

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One Response to Mark Mobius Upbeat on Emerging Asia

  1. Chris Devonshire-Ellis says:

    The other thing he said of interest is that there was no connection between a currency and debt, and that if a country moved to another currency, it would still have debts. (generally referring I guess to the Euro and the Drachma) He also compared Greece with Thailand in 1997 (Asian Financial Crisis) saying that Thailand recovered because it went through a strict reform process (I remember that, several other Asian countries such as Malaysia and Indonesia did the same) while Greece and the EU refuse to take these steps. It took Thailand two and a half years to recover. What future for Europe if they retain debt without reform?

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