Mark Mobius sees signs of optimism in the emerging markets, saying they have hit a turning point and may be ready to reverse course.
In a speech in Kuala Lumpur Tuesday, the executive chairman at Templeton Emerging Markets Group said, the “turnaround potential” for Asia is great amid growth in the region and that it “makes me happy” that investors are underweight on emerging markets.
Last week, the MSCI Emerging Markets Index erased its decline for 2016 and was back to where it started the year.
Meanwhile, riskier assets are seeing greater demand after oil rebounded from a 13-year low. Together with cheaper valuations, investors are jumping in despite concerns about China’s economic slowdown and the possible interest rates increases in the US.
While there is “maximum pessimism” in emerging Asia, China is still an “enormous growth story” while India is expanding at a “very nice rate,” Mobius said.
He also said the Malaysian ringgit is undervalued by 28% and the country is an attractive prospect.
Mobius also said he thinks commodity prices have bottomed out, and that US markets have peaked and may either go sideways or down, which is good for emerging markets.
If the Federal Reserve decides not to raise interest rates this year, then investors will look for better investment opportunities, he said.