June 19, 2012

Mobius: Europe Will Emerge Stronger Than Ever

Templeton emerging markets chairman predicts Europe will have the framework for a fiscal union within two years

Mark Mobius was featured in an Investment Advisor cover story in 2011. Mark Mobius was featured in an Investment Advisor cover story in 2011.

Maybe it’s too much sun in the Singaporean clime. Legendary emerging markets investor Mark Mobius is bullish—yes, bullish—on Europe.

Mobius, executive chairman of Templeton Emerging Markets Group, told CNBC Asia that European countries are “engaged in a prolonged and necessary game of chicken.”

"This will go on, back and forth for a long time,” he said. "They have to agree on fiscal responsibility and adhere to certain principles they have not had to do before. It's a big change, but I think they will make these reforms and Europe will emerge much stronger than ever before.”

Mobius, who oversees $50 billion in assets, is predicting Europe will have the framework for a fiscal union in place within one to two years.

He adds that investors who stay in safe havens for too long will miss an ensuing rebound in global markets.

"During the subprime crisis everyone was in a panic, everybody got out of all markets and rushed into U.S. Treasurys,” he told the network. “They learnt a bitter lesson because within 12 months, (many) markets were up 60%, 70%, 80%, 90% to 100%.

"The average growth this year will be 5%," he said of emerging markets, "compared to less than 1% in developed countries. They represent 34% of the world's market capitalization and most people have very little, if anything, in emerging markets," he said.

He told CNBC that his favorite developing economies are Vietnam and Nigeria. The network sums up his strategy thusly:

“Mobius recommends investors gain exposure by dollar cost averaging into mutual funds that focus on emerging markets. He suggests instead of jumping in with a lump sum, putting in a small amount every month over three or four years and limit risk by diversifying amongst countries, sectors and managers.”

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Read Advisors Without Borders in Investment Advisor magazine.

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