Emerging market stock guru Mark Mobius sees investment opportunities in the Chinese and Brazilian stock markets.
He likes bank shares in China, as the government’s effort to curb bank lending will boost China’s economy and snuff out bubbles.
“I don’t see a slowdown in lending as a bad thing,” the chairman of Templeton Asset Management told Bloomberg. “It moderates risk to some degree because people don’t go overboard.”
Mobius views the recent 20 percent drop in Chinese stocks as just a correction.
“I don’t see the start of a huge bear market any time soon. As the Chinese get more into spending rather than saving, the banks will do very well. The consumer market really has just scratched the surface.”
Meanwhile, the recent 7 percent drop in Brazilian stocks makes them the best bargain in Latin America, Mobius says.
“The most attractive market in Latin America is Brazil. Its valuation is not excessive.”
Companies in the Bovespa index trade at 20.3 times trailing 12-month earnings, compared to 27.5 times for the MSCI AC World Index of emerging markets, according to Bloomberg data.
Chinese demand for iron ore and oil will help the shares of Vale and Petroleo Brasileiro, Mobius says.
Not everyone agrees with his bullish view on China’s stocks.
"Concern over monetary tightening hurt (investor) sentiment, with market liquidity drying up,” Wu Nan, an analyst at Xiangcai Securities, told Reuters. "Few investors are brave enough to buy.”
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