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A global sell-off in emerging economies is nearing bottom, veteran emerging markets investor Mark Mobius said in Mexico on Wednesday during a tour to take the pulse of Latin American markets.
Mobius, who oversees around $47.3 billion in countries from China to Argentina, said that, compared with developed economies, emerging markets still have higher economic growth, growing foreign reserves and lower total debt relative to gross domestic product.
“My thinking is that people are already beginning to realise that maybe they moved too fast,” the chairman of Templeton Emerging Markets Fund said at a news conference in Mexico City on Wednesday.
“We’re nearing the bottom of this exodus.”
Currencies in Turkey, South Africa, Hungary and Russia, which suffered violent sell-offs over the past month, have recovered slightly, partly because central banks fought back with interest rates increases or exchange rate interventions.
Although risks still remain, with investors braced for the Federal Reserve’s stimulus withdrawal in April, and elections in five major emerging markets this year.
Mobius also warned that, although public and private debt together was still lower in emerging markets, he saw rising consumer debt in South Africa and Mexico.
“Consumer debt has gone up to a level where people are really pressed to pay,” he said.
Mobius praised the sweeping economic reforms, spanning energy to telecommunications, that Mexican president Enrique Pena Nieto pushed through Congress, and said investors were waiting with baited breath for the new laws to be implemented.
“Everyone we spoke to is excited about Mexico because of the oil. Any of the oil companies that you talk to want to come here,” he said.
Mexico is the world’s No. 10 oil producer.
However, Mobius, who specialises in equities, said opportunities to buy the shares of Mexican companies were not attractive across the board.
“We do feel that some of the stocks are somewhat expensive, so it’s very much a stock-pickers market,” he added.