As the economy continues to buckle under the pressure of rising interest rates and inflation, opportunities remain for savvy investors looking to make a wise purchase, according to the co-founder of London-based Mobius Capital Partners.
Mark Mobius opened MoneyShow’s “Investing in Inflationary Times” virtual seminar today by taking a positive view of the current turbulent markets.
“We are in a very good position in the sense that those of us who are looking for bargains are finding more and more because of the downturn in the market,” he said. “There are a lot of companies that look interesting that are not being sold at high prices in terms of their valuations.”
It is not a time for investors to be sitting on their money, he said. Despite the current downturn, investors should not stop investing and not stop looking for the ideal investment, he explained.
Individual stocks could see a resurgence, he said, adding that investors should look for companies that have no debt, high return on capital and positive earnings growth.
Clients should avoid firms with debt because of the U.S. Federal Reserve’s aggressive interest rate hikes, which have an impact on multiple sectors, Mobius said.
“I don’t think we are at the end [of inflation],” he said. “The Fed will definitely raise rates if they see that inflation continues to be high or go higher.”
Mobius said software companies are among the sectors where he's looking for investment opportunities.
“More and more organizations around the world and individuals depend on software,” he said. “Software companies—particularly in emerging markets where their costs are lower and they can export software around the world—are doing quite well.”
Healthcare, particularly companies involved with medical testing, are other areas of interest, he said.
“People are paying more attention to their health and paying more attention to how their body is reacting to the environment and to general conditions and they want more tests,” Mobius said.
Looking internationally, there are opportunities to invest in markets outside of the U.S. He also noted that the political strife in China, where citizens are protesting the Covid-19 restrictions, could have an impact on supply chains.
If China ceases to be a suitable place for manufacturing, other options could present themselves, such as Vietnam, India, Indonesia, Brazil and parts of South Africa, Mobius said. Brazil is in good position because it has natural resources, good technology, and a sufficient population, while South Africa has access to minerals needed to manufacture certain items, he said.
Finally, he spoke briefly about cryptocurrency and acknowledged it is an important investment among younger investors. He did not envision it replacing standard currency given the way individuals can pay for items online, but Mobius did see a practical use for it.
“There is a role for cryptocurrency as a means to transfer money across borders without government interference,” he said. “That means it is a very fast transaction with minimal risk to the currency.”