World equity markets are now in recovery mode, according to veteran emerging markets fund manager Mark Mobius, who said he was betting that markets had bottomed out.
"You would expect at a time like this, you have a bigger bear market, and that is why I’ve been cautious and kept a little powder dry, because there could be relapses in the market," said Mobius, founder of Mobius Capital Partners, which has $130 million assets under management.
"But the way it looks now, we may be in full recovery mode," Mobius told the Reuters Global Markets Forum on Thursday, May 7, from Munich.
Mobius said his top country picks were India, Brazil, South Korea and Taiwan.
In terms of sectors, his fund had increased weights in education, healthcare, software, specifically companies involved in cloud computing, and consumer areas, particularly those focused on online sales.
Following are edited excerpts from the conversation:
Would you say the equity markets have bottomed out? Or will there be more pain?
My bet is that they've probably bottomed out, but there will be relapses. I frankly was very surprised the bear market came down so quickly, and revived so suddenly as well. If you look at the markets, you see declines in dollar terms of between 30% and 40%. But looking at history, the bear markets, the average (decline) is 50%.
You would expect at a time like this, you have a bigger bear market. That is why I’ve been cautious and have kept a little powder dry, because there could be relapses in the market. But the way it looks now, we may be in full recovery mode.
How have you churned your portfolio in the coronavirus crisis, and what major shifts do you see coming as lockdowns start getting reversed?
We haven't changed country weightings very much. But we have increased sector weightings in education, healthcare, software, particularly related to the cloud, and in certain consumer areas where they're taking advantage of the internet and increasing their online sales.
Have your cash positions changed?
We've kept the cash level stable at 5% to 10%.
What would be the top emerging markets that you would invest more in?
I would say India, Brazil, Korea, Taiwan, which is an indirect way to get into China, and Hong Kong.
What is your view on Brazil?
We invested in consumer-oriented companies, internet and software, education, especially distance education, which is a growing fad as a result of this COVID-19 crisis.
What are your views on Turkish stocks and the lira given all the volatility we've seen?
Generally speaking, we want to go into those areas where things may look bad on a macro level, but on a micro level they’re pretty good. Same sectors in Turkey too, that I mentioned earlier, but added to that would be consumer goods, both export-oriented and local.
