KUCHING: Franklin Templeton Investments has acknowledged that looking at their global portfolios, China is up at the top list, ahead of India and Russia.
According to Mark Mobius, executive chairman of Templeton Emerging Markets Group at Franklin Templeton Investments, Russia remains a crucial country to the group despite all the problems with Ukraine, and they think many Russian stocks are underpriced.
He pointed out that Brazil would be very high on the list, adding that the BRIC countries are definitely prevalent.
“But then besides that, you have quite a lot of money in Turkey, in Thailand,” he said.
In their frontier funds, Mobius noted that they have quite a lot in the Middle East, in United Arab Emirates (UAE), in Nigeria, in Kenya, Vietnam.
“So there are a number of countries that are very interesting to us. Of course, as we mentioned, Thailand is very important as a growth engine,” he added.
Regarding sectors, Mobius highlighted that the banking sector is very important to them because banks reflect the tremendous growth that we are witnessing in these emerging countries.
“Secondly, oil and gas. Diversified oil and gas companies are important. We believe that the demand for fuel will continue to rise globally.
“Prices are very strong in the oil and gas sectors. So we think that is an area where we want to be. And then consumer, because per capita incomes are moving up, so we want to have exposure to consumer stocks,” he explained.
In terms of risks, Mobius acknowledged that the biggest risk, of course, is the fear of volatility.
“And I underline the word ‘fear’ because ‘volatility’ in and of itself is not a problem. In fact, it’s an opportunity because if you have very volatile stocks, you have an opportunity to buy at low points, and hopefully sell at high points,” he said.
However, he noted that people get very fearful when they see volatility and therefore they freeze. They do not take any action and they sit on their cash for too long.
“And, as you know what’s happening in the interest rate environment globally, it’s not very healthy. So, we feel that it’s best to get invested in good mutual funds with a good diversification, particularly in emerging markets to preserve capital,” he advised.