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Be ready for volatility in emerging markets, says Templeton’s Mobius

Investment veteran Dr. Mark Mobius says a market correction in emerging markets equities of up to 20 per cent could be seen over the forthcoming months.

Speaking earlier today at a 20th anniversary for the Templeton emerging markets investment trust Mobius said emerging markets were up almost 60 per cent from their absolute trough but said market corrections were inevitable.

He said: “I think there has to be corrections on the way, that is the nature of the beast. A correction of 10, 15, even 20 per cent is nothing in this environment particularly with the amount of derivatives out there.

“There must be a lot of hedge funds out there shorting this market because they think things have run to far. Of course the problem is if they’re proven wrong and the market keeps on moving up then you have more volatility on the upside which I think you make have seen already.”

Despite volatility Templeton’s emerging markets group chairman said he and his team continue to try and be as fully invested as possible in emerging markets and remain convinced in the long-term upwards trend of the markets.

He said: “You see individual stocks move down by 10-15 per cent in one day unless they’re prevented to by certain stock exchange rules so be ready for the volatility but also be confident that these markets will continue to move up as the money supply continues to increase and more importantly as the velocity of money increases.”

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