(Bloomberg News) Investor Mark Mobius is buying more equities in emerging markets as the region's economic growth will outperform the developed markets in the long term, and as stock valuations slipped amid market pessimism.
"This is a wonderful time to be able to buy stocks," Mobius, who oversees about $45 billion as executive chairman of Templeton Emerging Markets Group, told reporters in Kuala Lumpur this week. "Stock prices have gone down. I'm more optimistic than I was when the markets were booming. I'm more optimistic now because we can buy more bargains."
The MSCI Emerging Markets Index has slumped 15 percent from this year's high on March 2, paring its 2012 gain to 0.2 percent, on concern China's economic slowdown is deepening and Europe's debt crisis is worsening. The developing-nation's gauge trades at 10 times estimated earnings, compared with a one-year high of 11.1 times on Aug. 1, according to data compiled by Bloomberg. The MSCI World Index, which has advanced 3.3 percent this year, trades at 12.3 times.
Growth in emerging and developing economies will moderate to 5.6 percent in 2012 before picking up to 5.9 percent in 2013, compared with advanced economies' 1.4 percent growth this year and 1.9 percent expansion next year, according to the International Monetary Fund in a July 16 report.
Mobius has been accumulating shares in Malaysia, Indonesia, China, Russia, Vietnam, Nigeria and Latin America, especially Brazil, he said, adding that he prefers consumer products and raw material stocks.
"The valuations are now very, very low because of the pessimism," said Mobius. "Emerging markets will underperform from time to time but over a long term, they will definitely outperform because of the growth."
Mobius added that investors buying stocks now should have an investment timeframe of five years.