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Is the bull market emerging?

A volatile ride lies ahead for emerging markets according to Templeton’s Mark Mobius who says a market correction of up to 20 per cent is not unconceivable.

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?

Let us know your thoughts by clicking on the comments link below.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Bull run!
    How can the markets keep on moving upwards and upwards with all the bad news being released around the world. Job loses, wage reductions, companies slowing down production or stopping for months at a time, this list of bad news is almost endless. I really cant understand how the markets have risen to the current levels. There are those who will make a lot of money from this and there are a lot more that will lose a lot. Get out now and go safe for a while would be my advice.

  2. RE: Bull run!
    Bull Markets generally precede general economic recovery by 12-18 months. You could see the markets starting to turn back in February. Miners typically rise 1st and look how they have improved.

    Today people are talking about green shoots of economic recovery, banks paying back Gov funds, house price increases etc, but the effect of increasing unemployment towards 3m will continue until the end of the year.

    Macro-economic cycles – not all elements run in syncronisation, but are a consequance of each other.

    If you want to worry about something, worry why asset/housing values are still being left to run riot and create future boom and bust cycles. Give it 15 years and it will be Credit Crunch 2 – the death of the $!!!

  3. Re: Bull Run
    Also, dont get out now – terrible advice!! Get out a year or two ago. Get in!!! Buy low, sell high – thats how it works!! (DYOR of course)

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