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Mobius: Emerging Markets Will Break Out by Year-End

By Julie Crawshaw   |   Monday, 04 May 2009 02:57 PM

Emerging-market stocks may "break out" into a bull market at the end of the year as falling interest rates and easing inflation make equities more attractive, says Templeton Asset Management emerging market head Mark Mobius.

“We are at the base building period for the next bull market,” Mobius told Bloomberg.

“What I see happening is perhaps this continuing till the end of the year, and then a break out.”

The emerging market gauge has advanced 23 percent since March 23, outpacing the global measure’s 14 percent rise.

“Some companies will declare lower earnings, but there are still companies posting rising earnings,” Mobius says, adding that the average price-to-book ratio is lower than it has been in years.

“We are not buying stocks that have a price-earnings ratio of over 10, by and large, with some exceptions, and we look at a five year time frame,” Mobius notes.

“Looking five years out, things look pretty cheap.”

Asian Development Bank President Haruhiko Kuroda says that, with strong national and regional efforts and a mild recovery expected in the global economy next year, developing Asia and the Pacific should bounce back to about 6 percent growth in 2010.

"The transfer of savings from one part of the world to another worked well when advanced economies could absorb production from developing economies, but the current state of the global economy suggests that era has passed," Kuroda told AFP.

"By rebalancing export-driven growth with a greater reliance on domestic demand and consumption, Asia can lead the way in charting a new, globally beneficial development course."

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Emerging-market stocks may "break out" into a bull market at the end of the year as falling interest rates and easing inflation make equities more attractive, says Templeton Asset Management emerging market head Mark Mobius.“We are at the base building period for the next...
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