Global Credit Crunch Almost Over: Mobius

Source : The Business Times, August 30, 2007

Fund manager says markets may soar to new heights barring unforeseen events

(NEW YORK) The global economy is 'very healthy' and the credit crunch stemming from the United States mortgage losses has 'almost passed', said Mark Mobius, who oversees US$30 billion at Templeton Asset Management Ltd in Singapore.

'We're pretty bullish,' he said during an interview from Hong Kong. 'Markets are probably going to surge ahead to new highs barring any other unforeseen circumstances.' The fund manager said that he has purchased shares of energy companies Sinopec Shanghai Petrochemical Co, PetroChina Co and Petroleo Brasileiro SA during the market rout of the past month. South African shares and those of Chinese companies traded in Hong Kong are among the most attractive in emerging markets worldwide, he said. Dr Mobius added that US shares are 'not very expensive'. The Morgan Stanley Capital International Emerging-Markets Index, a global benchmark, has dropped 9.3 per cent since reaching a record high on July 23, on concern that defaults among US subprime borrowers will spill over to other markets and slow economic growth.

The Federal Reserve earlier this month lowered the interest rate it charges banks and acknowledged for the first time that an extraordinary policy shift is needed to contain the sub-prime mortgage collapse that began roiling the world's financial markets two months ago.

'The Fed has been doing the right thing,' Dr Mobius said. 'The US economy will continue to power along as a result.' The fund manager said that he's 'looking at companies in Egypt and Dubai' and mentioned real-estate stocks in the latter market, without elaborating.

'I can't think of any market where we've been paring down because money continues to flow into the funds,' he said.

His bullishness on stocks is shared by some of the biggest banks. Credit Suisse Group recommended on Aug 21 that investors should raise holdings of stocks worldwide following the sell-off in the past month and on speculation that the Fed won't let a credit-market debacle hurt growth.

Teun Draaisma, the Morgan Stanley strategist who advised trimming holdings in Europe before declines in February and July, raised his recommendation on stocks in the region to 'overweight' from 'neutral', on Aug 13. -- Bloomberg