Q&A on emerging markets with Mark Mobuis

By Prieur du Plessis on 03/11/2010 – 2:06 am PST -- Market Outlook

Qatar, Kazakhstan and Nigeria are among those countries being cited as ones to watch this year – why do you think this is?

Those are some countries that are citied as being watched but we should add a number of others such as Vietnam, Romania and a number of others. Qatar, Kazakhstan and Nigeria are all being watched because of their natural resources: Qatar – gas, Kazakhstan – oil, and Nigeria – oil.

Are there any particular sectors within frontier markets that you think will perform better than others?

We employ a bottom-up, value oriented, long-term approach. As we look for investments, we focus on specific companies rather than sectors or regions. However, during our analysis, we also consider the company’s position in its sector, the economic framework and the political environment.

Our focus continues to be on two key themes: consumers and commodities. With rising per capita income and strong demand for consumer goods, the earnings growth outlook for these stocks is positive. Commodity stocks also look good because we believe commodity prices will trend upwards, partly because of weakness in the U.S. dollar, and also because we expect the global demand for commodities to outgrow supply over the long term.

Source: Mark Mobius, Franklin Templeton Investments – Emerging Markets Overview, March 10, 2010.

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http://www.rich.co.ke Aly-Khan Satchu

Dear Prieur,

Interesting Piece. If I might revert on a few points that got ventilated.

1. Direct Investment versus Indirect.

I think South African Equities [in Africa] have been seen as the Gateway to SSA but that in fact whilst the returns are certainly higher Beta investing Directly, they are plain material.

3. What is your Outlook for Africa

If Africa represents 2% of Global GDP, I believe [and would be very interested to get the Macro Data] Investors are invested at 25% of that Benchmark ie at 0.5%. This sharp Rally we have been witnessing since the start of the Year is the beginning of a very sweet Spot for African Equities as Portfolio Managers now look to get to equilibrium.

I have to believe that whilst what is in the ground is worth a Great Deal but the real Outsize Value is in the Folks who walk upon it. I am certain we have entered an Information Century and the Mobile Phone and Internet in a late cycle Laboratory experiment type situation are bringing nearly a Billion Consumers into the Information Age and at as close to zero as you will find.

We got a little derailed but I am certain the Africa Frontier has crossed a Tipping Point.

Aly-Khan Satchu
http://www.rich.co.ke
Nairobi