Sunday, January 13, 2013

Mark Mobius tips Lanka to do well

Top investor projects frontier markets will perform well in 2013

Head of the Templeton Emerging Markets Group Mark Mobius, regarded as one of the foremost emerging market investors last week said that frontier markets including Vietnam, Bangladesh and Sri Lanka has a chance of performing extremely well in 2013.

Mobius speaking to Bloomberg Television’s Susan Li in Hong Kong last Tuesday said, “This year we think frontier markets will be particularly interesting. Markets in Africa, Vietnam, Bangladesh, Sri Lanka, Kazakhstan, some of the East European and Far East European countries, countries like Rumania, I think have a chance to perform very well as more and more investors discover value in these markets.

“We had the recovery in 2012. 2013 is going to be very good and the reason is that money supply continues to increase around the world. The US leads back low interest rates high money supply and now Japan has joined the club. And so all this money slashing around means it has to find a home and one of the nicest homes is the emerging markets”, Mobius said.

In an interview with Dow Jones Financial News earlier he had given two reasons for his forecast: strong economic fundamentals in most emerging economies and increased money supply around the world.

Mobius had told Dow Jones “Our outlook remains positive. We expect emerging economies to continue to grow much faster than developed economies in 2013 and for the foreseeable future, since we believe the economic fundamentals of most emerging economies remain strong despite the global financial crisis. In addition, we have seen the US Federal Reserve, European Central Bank, Bank of Japan and others pumping money into the financial system

“In our view, this liquidity is positive for emerging markets because it means that there is lots of cash in the system. As such, we expect more inflows into stock markets generally, including emerging stock markets. Despite the psychology of risk aversion that has seized financial markets since the eurozone crisis erupted, money has been pouring not only into emerging equity markets but even into the newer and smaller frontier markets”.

Meanwhile confirming these sentiments Asha Phillip Securities says that 2013 will be a better year for the Sri Lankan bourse with macro economic fundamentals improving further this year, interest rates and inflation expected to ease further making the Colombo Stock Exchange an attractive investment destination for local retailers. Mobius’s hopes also go in line with the forecast made by the Asian Development Bank that Asian economies will grow by about seven per cent in 2013. ADB President Kuroda Haruhiko has said that aggressive fiscal stimulus will help the Chinese economy to regain strength growing about 8% this year. According to him India and other emerging economies including Vietnam will be the next leaders of Asia’s growth.

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