November 15, 2011

Templeton’s Mobius: Europe Not a Concern

Europe won't 'drag everyone down,' global economy is 'puttering along'

Mark Mobius on the cover of Investment Advisor's February 2011 cover. Mark Mobius on the cover of Investment Advisor's February 2011 cover.

Franklin Templeton Investments’ Mark Mobius says Europe's debt crisis won’t push the global economy into a recession because liquidity provided by central banks is fueling underlying demand.

“We just don’t see any cause for alarm in the sense of things completely drying up and there being a situation where nobody buys anything,” Mobius told Bloomberg from Taipei on Nov. 10. “We don’t see a let-up in demand. Governments around the world continue to pump money into the system and interest rates are low.”

Despite continued economic worries over Europe in general and recent leadership changes in Italy and Greece, Mobius, who oversees more than $40 billion in assets as executive chairman of Templeton Emerging Markets Group, told the news service that Europe won’t “drag everyone down” into a recession and that the outlook is for a world economy “puttering along” at a slow pace of growth.

“We have not been very, very concerned about the situation in Europe,” Mobius said. “The markets of course will go haywire. Volatility is with us and will increase as we go forward, both up and down.”

With the average price-to-earnings ratios of stocks in emerging markets at “near their all-time lows,” Bloomberg reports Mobius is finding “great opportunities” to buy stocks, especially in Brazil, Russia and Turkey. In Thailand he said he’s “lying in wait” to buy if valuations fall.

Some banks in Brazil, Russia and Turkey that aren’t exposed to the Europe debt crisis are “looking pretty good,” especially those that are strengthening their consumer businesses, he said.

Mobius also said he is looking at banks in countries including Kenya and Zimbabwe, where regulation is “improving dramatically,” he said.

Commodities are also an area of interest, he said in the interview. Mobius said the long-term upward trend for commodities, including copper, palladium, nickel and platinum, remains intact.

“The trend is definitely up because there’s worldwide demand for whatever it is,” he said. “It’s there because of China, India, Brazil. All these big countries that are producing more and more consumer goods are going to need more and more.”

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