Templeton's fund manager Mobius says emerging market selloff to deepen amid outflows

The worst is not over for emerging markets after the benchmark stock index sank to a five-month low and the national currencies tumbled, said the fund manager of Templeton Emerging Markets Group, Mark Mobius, quoted by Bloomberg.

2014-02-07 15:31:07

"The negative sentiment is pretty much in place so you can expect a lot more selling," Mobius, 77, who oversees more than USD 50 billion in developing-nation assets as an executive chairman at Templeton, said in an interview from Rio de Janeiro today. "We are looking but actually not buying at this stage. Prices can come down or take time to stabilize."

The outlook from Mobius, a consistent advocate of emerging markets who has been investing in the countries for more than 40 years, contrasts with that of Jim ONeill, who created the BRIC moniker for the four largest developing economies and said this week that the rout created a buying opportunity. The MSCI Emerging Markets Index has risen 2.1 percent in the past two days, trimming its year-to-date decline to 6.7 percent. It's valued near its biggest discount in five years versus the MSCI World Index of advanced-country shares.

Emerging-market assets are tumbling as China's economy slows, weak currencies from India to Turkey spur central banks to raise interest rates and the U.S. Federal Reserve pushes ahead with plans to reduce monetary stimulus. Investors removed more than $12 billion from developing-nation equity funds in the past two weeks, the biggest outflow since January 2008, according to Morgan Stanley, citing data from EPFR Global.