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Stans the plan along with Russia and Mid East

Templeton’s emerging markets group chairman Dr. Mark Mobius has been increasing exposure to Russia in the emerging markets investment trust and is looking at investing in Iraq for the frontier funds.

He said he saw opportunities in Russia’s banking and consumer stocks, including mobile telecoms and retail companies and said the country’s multi-billion foreign reserves would help prop up the economy.

He said: “Russia is getting to become a deeper market than just oil and commodities. They were pretty hard hit because of the downturn in oil prices but a lot have people have overlooked the $400bn-plus in reserves and the special fund they have set aside. They are in a very good financial position to sustain the economy.”

Templeton executive vice-president for research in Poland Greg Konieczny said a new draft law limiting the number of shares of a Russian company that can be listed outside the country would help boost liquidity and potentially improve transparency.

Mobius added: “I think that Russia will move more towards the Chinese model where the government has control of the strategic industries to a greater extent and the oligarchs will have less power.”

At April 30, Temit held a 7.4 per cent weighting in Russia.

Mobius says he may invest in Iraq within a year through the firm’s recently launched frontier funds. He said that investment in the region relies on custodian banks establishing themselves there to hold assets the group would buy.

He said: “We would love to do more in Iran, it has incredible potential. We are not invested there yet but we are looking at Iraq. One of the problems we have when we go into these new markets is convincing our custodian banks to establish themselves in that country to hold the assets. It could be a year before this comes together and volumes would be small.”

The firm’s three frontier funds launched at the end of last year for US, Korean and European investors.

Mobius said countries in Africa, the Middle East and the Stans are all potential growth pockets and a particular focus for the funds.

He said: “The African population growth rate is the highest in the world so we expect there is going to be a lot more to do there. I think you have to look at places like Iraq, Iran, Syria and the Stans, Uzbekistan and so forth.”


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