Emerging markets will increasingly offer more investment opportunities as they ‘leap-frog’ traditional bricks-and-mortar businesses, says renowned emerging markets investor Mark Mobius in his last blog for Franklin Templeton.
Mobius will step down at the end of the month from the US asset management giant after 30 years developing its emerging market equity business.
In his final investment note for the firm, he outlines how investing in underdeveloped markets has changed and what future opportunities to keep an eye on.
Emerging and frontier markets are growing at a rapid pace, especially as technology continues to disrupt more traditional businesses, he said.
‘Many companies in emerging markets have moved straight to e-commerce and e-banking models, bypassing the establishment of brick-and-mortar retail outlets. This technology “leap frogging” is important—and I think it will likely continue to open up new investment opportunities.’
Technology has helped greatly expand the range of investment categories in the region investors can bet on.
He pointed out that in 2008, commodities and materials stocks constituted 50% of the MSCI Emerging Markets index. Now it only represents 15% of the index, with the information technology and consumer sectors taking up more of the index share.
‘We’ve seen a broadening of opportunities in the consumer sector in emerging markets amid a rising middle class with more discretionary income to spend in a wide variety of areas,’ said Mobius.
‘The remarkable expansion of the travel industry in China is one example. Chinese travelers are not only traveling within China, but are also visiting other countries in greater numbers. China now leads the world in outbound travel, spending some $261 billion in 2016.’
As an investor who has seen many a crisis and government changes, he gives a final word of advice to his peers.
‘Over more than three decades of emerging market investing, I’ve found that being a genial yet cynical optimist is the best posture to achieve long-term success.
'Because, despite all the stops and false starts, booms and busts, bubbles and crashes, over the long haul, I’ve found that time heals most ills, particularly when it comes to emerging markets.’
To read the full note, click here.