Mark Mobius, who has been exploring developing markets for the past 30 years and oversees $17bn in emerging market assets for Templeton Asset Management, predicted in late March that emerging stocks would recover from a bout of weakness. Sure enough, the MSCI Emerging Markets index has ticked up since then. And he continues to bang the drum for the developing world. According to Mobius, emerging market stocks are set to outpace major western markets for the fifth successive year in 2005, thanks to rapid economic growth double the industrialised world's rate and "very, very attractive valuations"; prices have yet to factor in prospects for economic and earnings growth. Along with strong GDP growth, falling inflation is helping to boost incomes and domestic savings, and the latter bodes well for greater local participation in equity markets as it creates a market for fund managers, he told Investment Adviser. Domestic investment "is beginning to drive" emerging markets.
So what are his favourite markets? He remains keen on Turkey: the rejection of the EU constitution, which observers fear may derail its eventual accession to the EU, should not jeopardise its appeal; the key for Turkey is to continue its programme of economic reform. Meanwhile, Brazil and Korea are among "the cheapest markets in the world today"; they both trade at under 8 times 2005 earnings. One of Mobius's biggest holdings is SK Corp (003600.KS, KRW 55,500), Korea's biggest oil refiner, which reported record earnings in the fourth quarter. Another favourite is Brazil's Banco Bradesco (BBD, $34.65 in new York)"a nice way to get exposure to the booming consumer market in Brazil".
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