Modi Will Emerge In A Strong Position

Mark Mobius, founder of emerging markets asset manager Mobius Capital Partners, says results in favour of the PM will impact Indian stocks favourably.

- Salil Panchal

Mark Mobius, founder of emerging markets asset manager Mobius Capital Partners, is confident about a second term for the Narendra Modi government. Speaking to Forbes India from Dubai, Mobius, who worked with Franklin Templeton Investments for 30 years, says the fact that India’s main indices have been inching up since their September 2018 correction indicates that sentiment and prices are improving. The current global economic slowdown, he says, may not impact China too much, but investors need to be wary about how the US economy fares in the coming quarters. Edited excerpts:

Q How deep is the global slowdown, particularly in the US and China?

There is some slowdown in China, but its government will not allow things to go out of hand. It is interesting that they have been able to convince the MSCI to increase the weightage for Asian markets… that means more money will flow into China. [This month, index provider MSCI said it would boost the proportion of Chinese A shares by four-fold in its global benchmark indices.] I don’t think the (slowdown) situation will get worse in China, but achieving high growth rates will be difficult.

In our talks with people in Bangladesh and Vietnam, it is clear that high labour export business is coming to China. But Chinese manufacturers are also moving to other parts of the world where labour costs are lower. Their overall trade with the US will not suffer; it will just shift to other parts of the world.

The US economy could see a sideways movement this year, but we could see more of a slowdown next year. Last year, we saw a big surge in the GDP (growing at 2.9 percent in 2018 compared to 2.3 percent in 2017)… but with elections coming up in the US later this year, I don’t think Donald Trump can allow the economy to get too weak.