'Very insignificant': Emerging market guru Mark Mobius on impact of India-Canada tensions on fund inflows

Veteran emerging market fund manager Mark Mobius (87), who is managing around $300 million worth of assets across the globe, is bullish on India's growth story. In an interaction with Business Today, the founder of Mobius Capital Partners threw light on the factors that are keeping him bullish on India's growth story. He further talked about his fitness mantra, India-Canada tensions and how a new investor or analyst can become successful in the stock markets. Edited excerpts:

Business Today: At present, what are your top investment destinations as a global fund manager?

Mark Mobius: We are finding incredible opportunities, particularly in India. We also have investments in Korea, Taiwan, Turkey, South Africa, and Brazil. So, there are lots of opportunities around the emerging markets world.

Business Today: What is keeping you bullish on India?

Mark Mobius: We are very positive about India. It is our biggest single allocation in terms of country. India is an excellent place to invest with a long-term view. There are many things which make us bullish on the country. Number one is it's a democracy and it has a very strong capital commitment and capital growth. Number two is the economy’s high growth, which is one of the highest in the world. Number three is the young population and number four is the English-speaking population, which is very evident around the world. India has so many people around the world who are leaders in different fields. And of course, that know-how is going to be coming back to India and help in the growth of the country. And of course, India is coming from a low base. Therefore, percentage changes in terms of growth are going to be very good.

Business Today: Broader indices in India namely the BSE MidCap and BSE SmallCap turned volatile in September. How do you see the second rung space playing out ?

Mark Mobius: I don’t see any big downside because there is enough demand. In any stock market, you see some corrections along the way. But if you take the long-term view, the growth prospects are very good for the market and I would think that any major correction would be an opportunity to buy.

Business Today: Since you said any correction is an opportunity to buy, which pockets do you think can deliver solid returns going ahead?

Mark Mobius: Anything related to technology. As you know, India is moving very, very quickly on hardware. Right now, India is a leader in software. Indian software companies are exporting all over the world. But now with the introduction of companies coming in from China to diversify away from the China market, you may see demand for semiconductors for all kinds of hardware which we can look at.

Business Today: India has been the president of the G20 this past year. How do you think the summit is going to benefit the country’s growth story in the long run?

Mark Mobius: The fact [is] this summit will bring a lot of attention to India on the part of the G20 members. That’s number one. And of course, the publicity surrounding the summit is also positive for India. So, it puts India on the map.

Business Today: China’s equity market has hardly delivered any returns to investors in 2023. What factors do you think have weighed sentiment? And do you think any further underperformance in the country can benefit in Indian markets?

Mark Mobius: A lot of companies around the world, particularly American Companies, want to diversify their manufacturing base away from dependence on China. But that does not mean that they are going to exit China completely. China is a very important market not only for manufacturing, but also for exports from other countries around the world. China is a big consumer market. The big change that's taking place in China is that they're moving away from emphasis on property investment and now more emphasis on technology because as you know, Xi Jinping has very clearly stated, that he wants China to be able to overtake the US in terms of semiconductors and technology. So, there’s going to be an incredible amount of investment in those areas.

Business Today: General elections will be held in India next year. How do you rate the work of the Narendra Modi government since 2014?

Mark Mobius: I have been very positive about what the Modi government has done. It’s amazing what they’ve accomplished in the time they’ve been in office. But I don’t want to take any political side because it depends on whoever gets in or whoever does get in. If they can continue these policies on infrastructure spending, opening up the economy and emphasis on technology then it will be great.

Business Today: How do you view the recent tensions between India and Canada? Can we see some outflows from Canadian funds from India?

Mark Mobius: Yes, you will see some outflow, but this is very insignificant. When you look at the total picture of trade, investment, etc., with Canada it is a very small part of the total picture. So I don't think this is going to be significant. There’s a lot of noise, I know about Justin Trudeau and what he said. But I don't think it's going to have a big impact on Indian markets.

Business Today: You are an inspiration for the world in terms of fitness. What helps you to stay fit and fine at the age of 87?

Mark Mobius: The main thing is to be optimistic. The world belongs to optimists, so you've got to be optimistic.

Business Today: Most of the people in the investing community look to you as their guru. We would like to know who your gurus are and what you have learned from them.

Mark Mobius: The guru for me was John Templeton. He was my mentor. I joined the Templeton organisation over 30 years ago and he was really a wonderful investor and a wonderful person.

Business Today: What is your advice to newbies who are aiming to pursue the stock market as a career? What are the things they should look for?

Mark Mobius: One should look for companies with a high return on capital, companies with low debt companies that have of course some degree of earnings growth and most importantly companies that have a high level of leadership. In other words, companies that have managements which are honest, forward-looking and capable. 

 

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