Stocks like Australian miners are good buys because growing giants like China will continuing developing rural areas within their borders and need raw materials to do so, says Mark Mobius, executive chairman of Templeton Asset Management’s emerging markets group.
"We're buying in Australia, especially some of the mining stocks down there," Mobius tells The Australian.
Commodities and emerging-market consumers are good plays for the wise investor, Mobius says.
(Templeton file photo)
While everyone knows consumers in China are rising in importance, more and more in rural areas there and elsewhere are going to want a taste of the good life — and will be able to afford it.
"The reason why we see so much potential is, if you just look at rural China, and the same story can be said of rural India, rural Cambodia, rural South Africa or wherever you want to go in the world, the goods and services in these rural areas is very, very low," Mobius says.
The Morgan Stanley Capital International Emerging Markets index has plummeted more than 10 percent, versus a 6.7 percent decline for the Standard & Poor’s 500 index of domestic stocks, the New York Times reports.
But investors aren't running from emerging markets — they're changing the way they invest in them.
Between January and July, investors pumped more than $12 billion in net new money into mutual funds that focus on developing-market stocks, the Times adds, as investors focus more on those who supply emerging-market consumers.
"An overarching theme that's occurring across the emerging markets is that the consumer base is blossoming into an income level that allows them to spend money on things beyond the necessities," says Mark D. Luschini, chief investment strategist at Janney Montgomery Scott, according to the New York Times.
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