Mark Mobius , Executive Chairman , Templeton EMs Group , believes that Mr. Bernanke in fact did the right thing by not promising QE3 at this juncture at the Jackson Hole symposium and explains why does he think that emerging markets are safe havens:
Mark Mobius: I think it was a smart move because he left his options open. He has got a number of tools as he stated and by not bringing up QE3, he dampens the expectations for inflation which I think is a big worry.
So in that sense, he did not say he will do it, but he can if he wants to.
He said for over long time now, they have got to diversify globally. In other words you can put all your eggs in the US treasury basket or the Euro basket or any other basket. You have got to be globally diversified and within that global diversification at least 34% should be in emerging markets, which is not the case now.
A whole picture globally is that emerging markets will be the safest play. Why? Because they are growing at three times faster than the developed countries, their debt to GDP levels are lower, their foreign exchange reserves are higher. Put this all together, you realise these are the places where you want to be. Now you cannot really pinpoint whether it is going to be Brazil or Turkey or Thailand. You have got to be diversified among these various countries because you can have volatility from one to the other.
The way we are doing it is saying 40-50% in Asia and the rest in Latin America, Africa and Eastern Europe, that is basically the structure of the portfolio. I think it will stay that way because Asia is a bigger area in terms of market capitalisation and economic size and so forth and of course the Asian countries are growing very faster.
We still believe longer-term commodity prices will trend upwards. There will be lots of volatility as we have said in the past. We expect oil prices $130, $80 up and down so forth. That trend, upward trend is there and not only for oil but for all other minerals.
source - www.dailymirror.lk
No comments:
Post a Comment