HONG KONG • The bottom for emerging-market (EM) stocks remains some way away, especially in China, said Mark Mobius (picture), partner and co-founder of Mobius Capital Partners LLP.
Equities in Shanghai face multiple headwinds, including debt, the influence of technology stocks and the ongoing trade conflict with the US, Mobius said in an interview with Bloomberg TV in Hong Kong.
“In the case of EMs, there’s a good chance we’ll get a recovery after continuing declines, but in the case of China you’ve got a number of problems,” he said. “We’ve been expecting a 30% decline and we’re now about 20 odd percent down in EMs, depending on which index you look at.”
China can keep its economic engine running by pushing the One Belt One Road (OBOR) infrastructure initiative. “OBOR means you’re able to then export a lot of know-how, a lot of technology, a lot of equipment and so forth, and thereby stimulate the economy without the help of the US.”
Turkey is in a “very, very interesting position” with both the currency and the stock market weaker. “It’s a big economy, there are great companies in Turkey,” he said. “There will be some liabilities, some problems moving forward, but I think Turkey is a place we want to look at.”
The Reserve Bank of India should actually cut interest rates to drive investment given the number of states in the nation with disparate economic conditions.
Mobius said he is keeping an eye on the yuan, with Beijing likely to be tempted to use the currency as a weapon in its trade war with the US. “If I was sitting in Beijing and thinking about employment, and if many of these people are working for exporting industries, I would want a currency that’s very competitive. I certainly wouldn’t want a stronger currency.” — Bloomberg