Mark Mobius: Brexit fears are overdone

Mark Mobius, executive chairman of Templeton Emerging Markets Group, says the UK's referendum result left "many investors surprised, including me". The referendum result has already led to "a post-Brexit hangover", not just for the UK but also for the rest of the world. While the impact on the FTSE and sterling made headlines, other markets were also affected by the shock result. "Emerging markets were not exempt, with the MSCI Emerging Markets index experiencing a sharp decline," he says.

However, Mobius thinks fears that a Brexit-induced UK recession could ripple out, hitting countries around the world, are overdone. After all, most emerging markets have "widely diversified" investment and trade links, and the amount of trade between the UK and the developing world is "relatively small".

Indeed, it could even end up being a long-term plus for investors' attitudes to emerging markets, since the vote "shows the world that political instability is not concentrated in emerging marketsit can be found even in developed markets". He also thinks that Brexit, should not affect "monetary policy in emerging markets or in the United States that much".

Start your trial of MoneyWeek today

Get unparalleled financial insight, analysis and expert opinion you can profit from.

Start your trial

Sign up for MoneyWeek’s free twice-daily newsletter.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Sign up

However, some emerging economies may be affected, such as those that "have greater ties to the United Kingdom". Emerging market companies with operations in Britain could also be affected, such as banks with property investments in the UK. Another worry is the global uncertainty created by the risk that "other members may decide to leave the EU". But even if this scenario comes to pass, he is relatively optimistic, suggesting that, "emerging markets should be able to differentiate themselves, and individual countries should be able to bounce back based on their unique fundamentals".