Here’s Why Veteran Mark Mobius Thinks India Is A ‘Great’ Investment Option
India offers a “great” opportunity for foreign investors despite a recent selloff in equities, according to emerging market investment veteran Mark Mobius.
“India is a collection of states that are competing with each other for investments,” 81-year-old Mobius, who left Franklin Templeton Investments in January to set up Mobius Capital Partners LLP, said. “That’s positive for foreign investors as they can choose the state which is offering them the best yield.”
Also, the upcoming election will be a crucial event to watch out for, he told BloombergQuint in an interaction. “The market would react positively if Prime Minister Modi gets stronger support.” There could be a temporary downturn, according to Mobius, if the support for Modi weakens at a time India is on a reform track.
Even as he expects the selloff in Indian equities to continue, Mobius sees strong opportunities in select stocks.
The investment veteran is bullish on non-banking financial companies. That’s when non-bank lenders are facing liquidity concerns after defaults by Infrastructure Leasing & Financial Services Ltd. and its subsidiaries threatened a contagion in the financial markets.
“We find tremendous opportunities in the select NBFC sector,” he said. The NBFCs that survived the recent rout, according to Mobius, will have a bigger market share. “An investor needs to see the balance sheet to get into strong companies in the sector.”
The equity indices corrected nearly 14 percent from its August peak on the back of higher oil prices, weaker rupee and a liquidity crisis for non-bank lenders following a default at IL&FS Ltd.
Mobius also bets on the consumer-oriented sector. “The growth in consumer-oriented companies are expected to do better than others. There will be great opportunities in the segment with the revolution taking place in the retail sector in India and rising income.”
Watch the full conversation:
Here are the key highlights from the conversation:
- They are witnessing a correction at present
- Expects more declines.
- The correction will lead to an increase in fund flows in emerging markets, particularly India.
- Brazil and India are the top two markets that Mobius is focusing on.
- Smaller countries like Turkey, Mexico, South Korea and Vietnam would be one of the frontier markets.
On Liquidity Crunch
- Doesn’t see any liquidity problem for long-term investors.
- Sometimes there’s an advantage to buy cheaper stocks that have relatively low liquidity.
On Trade War
- A full-blown trade war between the U.S. and China is beneficial for India and other countries.
- We should also look at the positives and not only the negatives from a trade war.