Mobius may seek shares in ‘cheap’ Vietnam, Nigeria

Investor Mark Mobius said he may buy more shares in the “particularly cheap” frontier markets of Vietnam, Nigeria, Kazakhstan and Ukraine even as developing nations face a “correction” that may exceed 20 percent.

“We’re finding some very interesting opportunities in those markets,” Mobius, who oversees US$34 billion of developing-nation assets at Templeton Asset Management Ltd., said in a Bloomberg Television interview in Singapore. Still, liquidity may be an issue for some of the markets, he said. Emerging markets are attracting more money to initial public offerings than developed nations for the first time, a warning sign that the record rally may turn into a 20 percent decline, Mobius said earlier this week. The MSCI Emerging Markets Index has gained 2.5 percent in the first four sessions of the year, extending last year’s 75 percent rally, the biggest since data began in 1988. The MSCI Frontier Markets Index is valued at 9.3 times estimated earnings after rising 7 percent in 2009, compared with 13 times for the emerging markets measure. Mobius had predicted the gains in emerging markets as early as March 23, when he told Bloomberg Television that developing- nation equities are building the base for the next “bull- market” rally. Correction While the bull market will continue, it is ripe to be interrupted by a correction of 15 percent to 20 percent “or more,” possibly triggered by increased initial public offerings or as governments reduce money supply, Mobius said Thursday. Any correction would offer investors an opportunity to resume stocks purchases at attractive prices, Mobius said. Templeton took advantage of the credit crisis in Dubai to purchase shares at lower levels, he said. Mobius last month said Emaar Properties PJSC, which opened on Jan. 4 the world’s tallest tower, may lead a recovery among “bombed-out” United Arab Emirates developers after the Dubai debt crisis sent stock prices plunging. The shares have gained 58 percent from its Dec. 9 low. Templeton is still finding stocks at “good valuations,” he said. Companies in the MSCI Emerging Markets Index are trading near the highest levels relative to earnings since 2000. IPOs in developing economies raised $77 billion last year, exceeding industrialized nations by 160 percent, annual Bloomberg data starting in 2000 show. Within the smallest developing markets, Sri Lanka’s stocks, last year’s best performer in Asia, have “gone up a little bit too high and we would like to see a correction from where we are now,” Mobius said. In Latin America, Templeton has become “cautious” on Argentina, while Venezuela and Ecuador are “not looking too good,” he said. Among commodities, Mobius said he expects fuel prices to move up more “dramatically” because of the freezing weather across the Northern Hemisphere.