Speaking on the 20th anniversary for the Templeton emerging markets investment trust last week, Mobius said investors should be prepared for volatility with the trillion-dollar backdrop of derivatives still plaguing the system but that the long-term trend is upwards.
He said: “A correction of 10, 15, even 20 per cent is nothing these days 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 too far.”
“We have to hang on and not panic by these kind of corrections because we know the longer term trend is up, there’s no question in our mind of that.
“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.”
In April, the global emerging markets sector suffered the biggest outflows of all UK domiciled funds losing £243.1m according to Investment Management Association statistics.
But speaking on June 4, Mobius noted that emerging equities were up almost 60 per cent from the lows reached at the end of 2008 and beginning of 2009.
Does recent performance mark the start of a fresh bull market for the emerging economies or do significant problems still lie ahead for trade? And which emerging market, if any, do you favour?
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