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    I will like to increase allocations in tech space in India; any fall a buying opportunity: Mark Mobius

    Synopsis

    Mark Mobius says that from a longer-term perspective, the potential is incredible. The market could go down 10%, 15%, even 20%, that really does not concern me. It could be an opportunity to buy more. So, it really depends on what stocks you are holding. If you are holding stocks with very little debt, with good return on capital, then you should do fine regardless of what happens to the market.

    Mark Mobius-1200ETMarkets.com
    This year, next year, five years, the Indian market will continue to do well. There will be corrections along the way, of course, but at the end of the day those who are in the Indian market, in good stocks, in stocks with low debt, they should do fine, says Mark Mobius, Partner, Mobius Capital Partner

    Mobius also says that when companies or governments are in trouble, they turn to technology to solve their problems. The technology area is going to grow globally in any case. But more importantly, India is going to be taking a bigger and bigger role in the semiconductor and hardware area, in the semiconductor technology area. So he is looking at the whole technology area . He is really interested in increasing that allocation in India through those channels.


    How is the world looking? Suddenly we are talking about challenges in America, big problems in Europe, and a repeat of 2008. In your understanding, what is the similarity with 2020 and 2008?
    My feeling is that there is a great deal of confusion right now, because we have a situation where people are thinking maybe my money in the bank is not safe and on the other hand, the governments in the US and other countries are trying to prop up the banks and there is a big question mark whether this is going to be successful.

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    So far, it has been successful in the US and, of course, in Switzerland it happened; but people are really beginning to question the safety of banks. That is the reason why we have seen gold go up and Bitcoin go up because people feel that maybe these two areas would be safe from any problems that the banks have or any problems that you see in the governments. So, that is a very significant change that has happened with a great deal of uncertainty.

    Of course, in this market, the emerging markets have underperformed the US market because people are looking at China and China is the biggest component of the emerging markets index. But if you look at what has happened in Taiwan and Korea, you will see that those two markets are doing quite well. India has come down a little bit, but the good news for India is that exports from Taiwan to India are going up, which is a very significant change because that means that more and more semiconductor business is going to be flowing into India and this is going to be very positive for India.

    Suddenly, a lot of asset classes have become disjointed. Crude is down, copper is up, gold is up, and Bitcoin is giving gold some company. Why is that in this financial risk-off moment, we have seen a very disjointed move in all financial assets?
    Yes, it is very disjointed, but it does make a lot of sense because if you are afraid of your deposit in the bank, where do you go? Do you go into stocks? Not really, because people feel that maybe the stock market will not do well if the inflation numbers go up and the Fed becomes more aggressive on interest rate increases. So, if you look around, what is the place to go? It is gold and maybe Bitcoin because they feel Bitcoin may not be affected by these other factors.

    Indian markets are down 20% from the high in dollar terms. Chinese markets are down 45% in dollar terms. Obviously, that makes China much more attractive and that narrative, has been at play in the last couple of months. Do you think this narrative of booking profits out of India and moving to China is real?
    No, what has happened is that we have seen some recovery in China because China now has opened up more. The Covid situation has pretty much been suppressed and now the Chinese government is welcoming foreign investment and is trying to encourage more investment in China. But it really has not worked very well because the Chinese market has come down. And the reason for that, of course, is that the biggest market makers in China are the local people who invest in the stock market. If they are not confident or if they do not have the money to put into the market, then the market will not do very well and, of course, that affects the emerging markets index because China is about 30% of the index.

    Have you increased your allocation in this decline in India?
    No, we have kept it the same. We are looking to increase as we go forward. But right now, we have kept it the same as we have had. We still have a very positive outlook for India.

    And I am assuming that India is your top weighted market in terms of absolute percentage commitment?
    Well, if you look at our weighting, you will see that it is much higher than the index because we feel more confident. The biggest allocation is Taiwan and then India. So, at the end of the day, we have great confidence in what is happening in Taiwan and as part of that, what is going to happen in India as India becomes more semiconductor oriented and more manufacturing takes place in India.

    I recently came across an interview of yours in global media where you have gone on record saying that as an investor you are worried about your money which is in China where you are not allowed to withdraw the money. Is it true? Are you facing that problem?
    That was the problem. But now it has been solved. Thanks for the news. People in the banks began to wake up and realise that it does not make sense to be holding up my money in China. So I have been able to solve that. Thank God.

    Last time when we interacted with you, you had three stocks in India. Have you made it four? Are you planning to make it five or even six?
    I would like to make it more and more and the thing that I am looking at, of course, is the whole technology area and not necessarily the software, but the hardware. I believe this is going to be very interesting going forward. I am really interested in increasing that allocation in India through those channels.

    Why do you like technology in India because the Indian technology sector is still exposed to global macros which are looking challenging? Indian IT companies get a lion's share of business from the BFSI space and that is where the global problem is? Aren’t you worried about it?
    Mark Mobius: No, the reason why I am worried is that when you get down to it, when companies are in trouble or when societies are in trouble, when governments are in trouble, they turn to technology to solve their problems. And technology often can solve their problems. So, the technology area is going to grow globally in any case. But more importantly, India is going to be taking a bigger and bigger role in the semiconductor and hardware area, in the semiconductor technology area and the reason for that is that the problems with China and the US means that a lot of the manufacturing that has been taking place in China has to move away and that is the reason why Taiwan manufacturers are looking to India as a place to manufacture and to keep up their services to their clients in America and Europe.

    There are those who keep on pointing out this consistent fact again and again, which is that Indian markets are great, the Indian economy is moving in the right direction, but Indian stocks are not fairly but richly priced. If you are buying gold at the price of gold, you are unlikely to make great gains.
    If you look at the Indian market from a longer term perspective, the potential is incredible. I am not too concerned about these short-term moves. The market could go down 10%, 15%, even 20%, that really does not concern me, in fact it could be an opportunity to buy more. So, it really depends on what stocks you are holding. If you are holding stocks with very little debt, with good return on capital, then you should do fine regardless of what happens to the market.

    Where do you think the markets are headed in next one year, next three years and next five years? Also what do you like within India? How would you decode it for us?
    Well, as you know, I am a perpetual optimist. I believe that markets will continue to go up. There will be big corrections. The good news is that when there is a big correction or when there is a bear market, it is very short lived. It tends to last no more than a year and then that provides an incredible buying opportunity.

    So, it does not make sense to try to predict what is going to happen this year, next year, three years, five years from now. The best thing to do is to find the great stocks, stick to those regardless of what happens, buy more when the price goes down and you will do very-very well. So, I have to say this year, next year, five years, the Indian market will continue to do well. There will be corrections along the way, of course, but at the end of the day those who are in the Indian market, in good stocks, in stocks with low debt, they should do fine.



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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