Mark Mobius: populist parties set to continue

Emerging-markets fund manager Mark Mobius reckons we can expect to see populist parties do well for a while longer.

The surging popularity of populist parties "is going to continue" predicts emerging-markets fund manager Mark Mobius of Templeton. As a result, the European Commission "will have to reconsider how much the European Union interferes in the behaviour of member states". The vote for Brexit signalled to the rest of the EU that "things will have to change", while the recent referendum defeat for Italy's former prime minister, Matteo Renzi, merely confirmed the shift in tone.

While the US dollar has risen in the wake of Donald Trump's victory (and last week's rate hike by the Federal Reserve), Mobius thinks it should fall in the medium to long term due to Trump's plans significantly to increase spending on infrastructure and defence, thus increasing the national debt.

This fiscal action is needed, as US monetary policy has been ineffectively "pushing on a string" for some time. In any case, the dollar will need to be significantly weaker if Trump is going to fulfil his campaign promises of an industrial revival in the American Midwest, which would need to be driven by manufacturing exports.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Oil prices may rise further, but not much beyond $60 a barrel, so Gulf States including Saudi Arabia will have to continue to diversify to reduce their dependence on oil. These efforts will take time to bear fruit, yet even a partial reform of the Saudi economy could provide a big boost for the Arab market. However, Mobius would avoid investing in Egypt "it's hard to get your money out once you put it in".

Dr Matthew Partridge

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri