Mark Mobius, emerging markets expert, managing a 30B Templeton fund. Valuations in emerging markets are considerably lower than those in many developed ones. But above all, it’s reassuring to read that somebody with some cloud is actually looking at valuations at all, because it seems that this part of investing had gone out of the window completely.
Mobius Looking at Brazil, China, Russia After Slump (Update2)
By Daniela Silberstein and John Dawson
- Oct. 9 (Bloomberg) — Mark Mobius said he sees bargains in Russia, China, Brazil, India, Turkey and South Africa and is ready to start buying after a record plunge in emerging-market stocks.
- “We now have too many things to look at so we are picking the ones that are most down,” Mobius, who oversees about $30 billion in emerging-market equities at Templeton Asset Management Ltd., said in a Bloomberg television interview from Rome. “If you look at valuations, you can see these stocks are at a point where maximum pessimism is playing a big role. I think we’ll be very happy a year or two from now.”
- Russia, China and Brazil have led this year’s 49 percent plunge in the MSCI Emerging Markets Index, on speculation that the global credit crisis will spur a slowdown in demand for the commodities that drive developing nations’ economies. The biggest annual slump on record dating back to 1987 left the gauge for developing markets valued at 8.7 times their average earnings, the cheapest since October 1998, according to data compiled by Bloomberg.
- Templeton’s Emerging Markets Fund lost 52 percent in 2008, in line with the drop in the MSCI gauge of developing markets.
- Emerging Markets Rebound. The MSCI Emerging Markets Index added 4.3 percent today as of 2:12 p.m. in London, snapping a six-day streak of declines, after central banks in South Korea, Taiwan and Hong Kong joined the U.S., Europe and China in cutting rates to stem the credit crisis. Russia’s Micex Index jumped 12 percent after a suspension yesterday caused by a 14 percent plunge.
- The Micex has lost 62 percent of its value this year, compared with a 63 percent drop for China’s CSI 300 Index and a 37 percent slump for the Bovespa in Brazil. The Micex yesterday was valued at 3.9 times the earnings of its companies, the cheapest of any European market tracked by Bloomberg.
- Investors pulled about $74 billion out of Russia since the war with Georgia in August in a selloff exacerbated by falling oil prices and global bank collapses, according to BNP Paribas SA data.
- China’s CSI 300 last month traded at 13.5 times profit, the lowest level since Bloomberg began tracking the data in 2005. The Bovespa yesterday was valued at 9.5 times earnings, the cheapest since July 2005.
Hmm, 3.9 times earnings, perhaps Russia is the place to be.. However, if you like these kinds of valuations, we have another one at those levels for you: Trina Solar (TSL).