Veteran investor Mark Mobius has allocated almost half of his emerging-markets fund to India and Taiwan to help offset a slide in China shares that has dragged down returns from developing nations as a whole.
“India is on a 50-year rally,” even if there are short bouts of bear markets, Mobius said in an interview on Bloomberg Television. “India is maybe where China used to be 10 years ago,” he said, adding the government policies of unifying rules across states will help the country in the long run.
Mobius’ bullish view on India clashes with those of analysts at Morgan Stanley and Nomura Holdings Inc., who have downgraded the stock market after the benchmark S&P BSE Sensex Index more than doubled from a March 2020 low.
Emerging-market equities have trailed behind their developed-nation peers this year, held back by losses in China as the government has roiled markets with a widespread regulatory crackdown.
“People say emerging-markets look bad because China is dragging down the index, but they have to look at other areas such as India that are going up,” said Mobius, who founded Mobius Capital Partners LLP after a career at Franklin Templeton Investments.
The Mobius Emerging Markets Fund has a combined 45% of its portfolio allocated to India and Taiwan, with tech hardware and software the biggest holdings in these markets. Indian software services provider Persistent Systems Ltd. and eMemory Technology Inc., a Taiwanese chip technology provider, were among its biggest stakes as of end-September. The stocks have both more than doubled this year.
That said, the decline in Chinese equities has presented some opportunities, Mobius said.
“The government has begun to regulate better, trying to avoid monopolies,” he said. “We are looking at small and medium-sized companies that will benefit from these changes where the government wants a more level playing field.”
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