Wednesday, August 24, 2011

Inflation will drive global stocks higher: Mark Mobius

SYDNEY/HONG KONG: Global stock markets are “bouncing along the bottom” after tumbling 16% in the past four weeks, and will start to climb as inflation accelerates, said Templeton Asset Management’s Mark Mobius.

The US Federal Reserve hasn’t given up supporting the economy by printing money and buying more Treasuries, said Mobius, executive chairman of Templeton Asset’s emerging markets group. The firm is buying commodity stocks, expecting raw material prices to rise, he said.

“At this point, I do think we’re bouncing along the bottom,” Mobius, who helps manage about $50 billion, said in a telephone interview with Bloomberg Television on Monday. “For us in equities, it’s particularly good because people will eventually realise that to beat inflation that’s coming as a result of this higher money supply, we’re going to have to be into equities.”

The MSCI World Index of stocks fell last week for a fourth straight week as investors took flight after a deadlock in the US congress brought the government to the brink of default, reports showed the world’s biggest economy is slowing, and concern grew that Europe’s sovereign-debt crisis will spread.

The losses triggered speculation US Fed chairman Ben S Bernanke will this weekend signal a third-round of asset purchases to help sustain a recovery.

Energy and material stocks have been among the three worst performers in the past months in the 10 industry groups tracked by the MSCI Asia-Pacific Index, as a measure of primary metals traded in London and New-York-traded oil futures slumped.

“It’s been an opportunity,” said Mobius. “With the amount of liquidity coming into the system, commodity prices have to be maintained at higher and higher levels. The trend is very, very clear, and that’s up.”

source - www.dailymirror.lk

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