Asia Pacific's family offices are a nimble bunch and never more so than when it comes to ESG where they're already proving to be ahead of the regulators.
Mark Mobius is the Singapore-based executive chairman of Templeton Asset Management. He joined Templeton in 1987 as president and portfolio manager of the Templeton Emerging Markets Fund. He now directs the Templeton research team based in 14 global emerging markets offices and manages emerging markets portfolios.
MobiusÆs team manages the emerging market portfolios for its parent, Franklin Templeton Investments. The team is made up of 39 analysts spread across 15 emerging markets. Worldwide, Templeton manages around $430 billion, of which about 20% is invested in Asia.
What are the biggest opportunities that you see in the coming 12 months?
Mobius: We see that there are many opportunities now since markets have come down substantially. While no one can predict the absolute bottom of a market, valuations are looking attractive. History has shown us that the best time to buy is when everyone is despondently selling. Such situations enable us to pick up stocks at more appealing prices.
We continue to look for opportunities and, of course, will continue to take advantage of these opportunities in emerging markets for attractively valued companies with strong fundamentals; the consumer stocks and commodity areas are particularly attractive. With our long experience and local presence in the emerging markets, our researchers on the ground have the direct access to local resources and facilitate relationships with local contacts. And perhaps more importantly, we are able to uncover new opportunities, opportunities which may not be evident to other investors.
How has the global financial crisis affected the way you manage your portfolios?
The crisis has opened up many more opportunities so that we are now able to buy stocks that were too expensive previously.
What is the biggest lesson you have learned from the US credit crisis?
Don't use leverage. Don't buy what you don't understand.
Have you made any significant changes to your asset allocation in terms of markets or sectors in the past few months?
No, we have not made any significant changes.
What are your favoured markets in Asia?
China and India. Both markets have very attractive stocks and both markets are growing at a fast pace.
What markets are you bearish over?
We are not bearish on any markets since all have stocks that are attractive.
What are your market weightings within an Asia ex-Japan equities portfolio?
China - 9.80%
Hong Kong - 0.7%
India - 3.40%
Indonesia - 1.20%
Korea - 3.40%
Malaysia - 0.10%
Pakistan - 1.90%
Philippines - 0.7%
Singapore - 2.50%
Sri Lanka - N/A
Taiwan - 7.80%
Thailand - 3.0%
Vietnam û N/A
Which sectors do you expect to outperform in the coming year?
We expect the consumer sector to outperform because the per-capita income is rising in the emerging markets.
Which sectors do you expect to underperform?
We see opportunities in every sector. Emerging markets are also tied to the global markets, including the developed ones, since world trade has expanded dramatically in recent years and the advent of rapid and cheap communications means that news in one market can affect other markets. This all, however, does not mean a downturn on one market will be followed by downturns in other markets. Emerging markets may react in the short term to something happening in the US, but local influences could take precedence and see markets change direction.
What are the main challenges that you expect to face in the coming 12 months?
The main challenge is to obtain liquidity. There are many attractive stocks that don't have enough daily turnover.
What are the main risks of investing in Asia at the moment? How are you managing those risks?
The main risk is illiquidity since with open-ended funds it is important to have liquidity. With regards to risk management, we do a lot of research to make sure that the companies invested are well managed and are not heavily leveraged.
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