The bottom for emerging-market stocks remains some way away, especially in China, said Mark Mobius, partner and co-founder of Mobius Capital Partners.
Equities in Shanghai face multiple headwinds, including debt, the influence of technology stocks and the ongoing trade conflict with the US, Mr Mobius said in an interview with Bloomberg TV in Hong Kong.
“In the case of emerging markets, 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 per cent decline and we’re now about 20 odd per cent down in emerging markets, depending on which index you look at.”
China, he said, can keep its economic engine running by pushing the One Belt One Road infrastructure initiative.
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“One Belt One Road 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.”
Mr 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.”
In terms of Turkey, he said the country 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.”
In India, another big emerging market, Mr Mobius said 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.
