Mark Mobius says Covid-19 created best opportunity in markets, optimists will win

Mumbai: Emerging markets guru Mark Mobius looks for an opportunity in every crisis, and has used the recent meltdown to lap up stocks.

“Whenever we see a huge downturn, it is a wonderful opportunity to buy (stocks),” Mobius said in a speech on the current steep correction in global markets on the back of the coronavirus pandemic and the subsequent lockdowns in most parts of the world.

“It gives us an opportunity to sit back and do some reforms,” Mobius said from Germany in a virtual fireside chat hosted by Toro Finserve LLP. He said in India the Modi government acted fast on reforms, particularly on labour reforms.

The market veteran, who spent more than 30 years at Franklin Templeton and is currently serving as Founder and Fund Manager at Mobius Capital markets, advised asset managers to be optimistic in such trying times.

“Be optimistic. The world belongs to optimists and not pessimists. Now is the time to buy stocks,” he said.

Mobius said the top countries that featured in his portfolio included China, India, Turkey, Brazil, South Africa and South Korea, while the top sectors included healthcare, education, internet-based companies and those in infrastructure-related manufacturing.

“Bear markets are short in duration, but bull markets are long,” he said, adding that bear markets should be calculated from the peak to the bottom, and not from one peak to another as erroneously perceived by many.

Mobius was also optimistic in his outlook for gold, given the increase in currency in circulation across the globe.

He was optimistic that India will bounce back by the end of 2020, and will perform better in 2021. “Post-Covid, India will do well. You will see a rapid recovery. India can bounce back very quickly by the end of this year, and next year will be a good one for India,” he hoped.

“A lot of people think India is a poor country, but it is a rich country. There is a lot of money under the mattress,” he said, adding that the channeling of savings into financial markets was essential.

Mobius said individual states may be on the forefront of driving the economy on the growth path. “You do have a state system, and each state has its own policy. Some states will make the right decisions to prop up economic recovery,” he said.

According to Mobius, India stands to gain from the US-China standoff. “Apart from being an outsourcing hub for software services, it should also look at becoming an outsourcer for mobile phones and other such hardware,” he said.

Speaking at a webinar organized by Marcellus Investment Managers, Mobius said reactions and recoveries tend to be very fast in the Indian market.

“The outlook for India is pretty good. I think it is a great opportunity now to look at small and medium-sized companies,” he said, stressing that one should stick to quality and growth companies in this space.

In the fireside chat, Mobius advised Indians to diversify their portfolio overseas. “No doubt India has great companies, but there are great companies elsewhere in the world too. You must go to places which have suffered the most,” he said.

He, however, said the strict implementation of lockdowns by many countries to fight the covid-19 pandemic was proving to be harmful for their economies.

“The reaction of many countries has been excessive, and are harmful to their economies. One needs to see what were the cost and benefits of such actions,” he said.

Mobius pointed out that South Africa had one of the world’s strictest lockdowns, but its pre-coronavirus unemployment rate, which was around 30 per cent, would now rise to 50-60 per cent.

India currently is in its fourth nationwide lockdown up to May 31, and despite the efforts, Covid-19 infections have been on a rise.

Mobius said countries reopening their economies should take a lesson or two from those who have kept their economies open -- such as Sweden -- on issues such as distributing masks and keeping safe distance. “India needs to learn various methods to prevent the spread, while putting people back to work,” he said.