Mark Mobius maintains 95% holdings in cash amid trade war concerns; stays optimistic about India: Report

Veteran investor Mark Mobius, known for his extensive experience in emerging markets, has opted to keep an overwhelming 95% of his funds' holdings in cash. "At this stage, cash is king. So 95% of my money in the funds is in cash," Mobius said during an interview on Bloomberg Television. 

He emphasised the necessity of retaining cash to be prepared for strategic investments once market conditions stabilise. The decision reflects Mobius's cautious stance amid ongoing trade tensions, echoing a broader investor sentiment that is reportedly the most pessimistic in three decades, according to a Bank of America Corp. survey. 

Mobius predicted that investors will only be able to effectively evaluate market opportunities after the culmination of trade negotiations, which he anticipates will take four to six months. He said he plans to maintain his high cash position for "more than three to four months" before considering deploying these funds based on emerging opportunities. "If the market comes down further, of course we will put more money in," Mobius, co-founder of Mobius Capital Partners, stated. His views point to the potential volatility in financial markets due to ongoing tariff disputes. 

Despite the defensive cash-heavy approach, Mobius said he is optimistic about specific markets such as India, which he believes will fare well amid the current geopolitical climate.

He predicted India would benefit as global supply chains potentially shift away from China under policies influenced by US leadership. However, Mobius also expressed a willingness to adopt a more bullish stance on China should there be significant policy changes favouring trade and domestic consumption. 

Along with his cash-centric strategy, Mobius maintained a "little bit" of investment in S&P 500 funds to track market dynamics, signalling a belief in a potential rise in this index by year-end as investor confidence potentially returns. He noted US President Trump’s inclination to prevent a significant market downturn by making strategic adjustments and announcements. These actions, according to Mobius, are likely intended to bolster market confidence amidst existing uncertainties. 

US-India tariff talks

President Donald Trump stated on Tuesday that progress is being made in tariff negotiations with India and expressed optimism about reaching a trade deal with the country. Speaking to reporters outside the White House, Trump mentioned that he believes a deal will be struck with India, citing the recent visit of Prime Minister Narendra Modi to the United States. 

Treasury Secretary Scott Bessent also indicated that the U.S. is near a trade agreement with India. Vice President JD Vance's meeting with Modi was described as productive, and there is potential for announcements regarding India in the near future. Bessent highlighted India's preparedness for negotiations due to its existing tariff structure, making the discussions easier.

According to Raghuram Rajan, an economist and finance professor at the University of Chicago Booth School of Business, India stands to gain significantly from negotiating lower tariffs, particularly relative to countries with higher tariffs. Rajan emphasized the potential for increased interest in India among companies, especially considering its substantial domestic market. This assessment was shared during an interview on CNBC. As the White House continues to pursue trade agreements, Rajan's insights underscore the potential benefits of reducing trade barriers for India.