Mobius sees emerging stocks hit the bottom

Bloomberg

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"We’re beginning to see this bottoming situation," Mobius, who oversees about $26 billion in emerging market stocks as executive chairman of Templeton Asset Management, said on Bloomberg Television Friday. "I sincerely believe that next year we’re going to be beginning the next bull phase. The amount of money going into the system has to find a home."

The MSCI Emerging Markets Index, a benchmark for equities in 24 developing nations, tumbled 53 percent this year as lower oil and metals prices reduced earnings in commodity-exporting countries and the freeze in credit markets pushed the global economy toward recession. Mobius said he’s buying "terrific bargains all over the place" and his biggest holdings are in Asia.

The MSCI index of emerging-market stocks has rallied 28 percent from a four-year low on Oct. 27, compared with an 8.5 percent rise in the MSCI World Index of developed-market equities in the same period. The emerging-markets gauge is valued at 8.7 times its companies’ reported earnings, compared with 11.6 times for the developed measure."What you are going to see is a reversion to emerging markets first because those markets are the cheapest" and the economies are growing faster, Mobius said.