Dr Mark Mobius on Asia’s emerging markets

Dr Mark Mobius

“Nobody’s going to invest in property based on a 30 year lease,” says Dr Mark Mobius voicing a frustration with laws and regulations in Vietnam that have hindered the expansion of an apartment building in Hanoi owned by Franklin Templeton Investments for whom he is now Executive Chairman.

Existing international investment would suggest that his frustrations are not meant to be taken too literally.

But with over forty years in the investment markets and being one of the first American investment brokers to move to Hong Kong, appreciating the potential of Asia’s emerging markets, Dr Mark Mobius is perhaps one of the few for whom the legends and reputation is truly deserved.

Joining Franklin Templeton Investments in 1987 as president and portfolio manager of the Templeton Emerging Markets Fund, Inc., he now oversees investments of about US$37 billion in various global emerging markets.

Within these, Thailand and other Asian neighbours feature prominently with nearly nine percent invested in Thailand he said, speaking at the Foreign Correspondents’ Club of Thailand in Bangkok this week.

This percent might be a surprise for those that witnessed the bloody battles waged on Bangkok’s streets a few months ago, but for one whose proposed office location was burnt down in May, he remains upbeat.

“Having lived here, having experienced all these changes of government, we’ve seen the improvements. A lot of people miss that fact, I think, it’s only if you’ve been here for a long time and lived here, that you’re able to see the improvements taking place.”

He admits to “Lots of concerns, lots of risks”, particularly political, in Thailand, but, regardless, John Franklin Templeton Investments is in the process of opening offices in Bangkok at this very moment.

This coincides with the launch of a second US$300 million Asian Property Investment Fund.

Though he offers few details, “I don’t run that one”, he laughs, but notes that “They would be more likely to go into companies like Land and Houses, so forth and so on.” Moreover, big is not always best.

“There is always going to be a need for good housing, similar to what you see in Hong Kong – affordable middle income housing.”

Investments are based on the individual circumstances of each country and city, he says and here in Thailand even the effect of the environmental legislative deadlock on the industrial estate of Map Ta Phut – which has seen over 30 projects halted since 2009 – has not deterred him.

With the growth of the automobile industry in Thailand that has seen investments of approximately US$700 million from Ford, Toyota and industrial estate company Hemaraj in 2010 alone, Mobius confides. “there will be a good market for industrial estates and that’s why we’ve been investing. You’ll get ups and downs, but the trend will be very positive.”

And for those watching Thailand’s industrial estate properties, Vietnam remains a threat on the horizon, but one that is still not fully understood. It is, however, one of Templeton’s leading frontier markets.

“There’s no question that there is growth potential because labour is cheap and labour is skilled, so some manufacturing is moving there.” But issues, as with everywhere in Asia, remain.

“There’s also corruption. Now of course Thailand has corruption too, in Vietnam its much greater,” he says, blaming this for bottlenecks in investment, infrastructure and Vietnam’s overall connectivity.

With stock market legislation further impeding investment – any purchase of 5 per cent or more of a company requires an announcement three days in advance that leads to concerns over ‘front running’ – Vietnam deservedly remains a ‘frontier’ market.

“Liquidity is low because of these laws so they’ve gotta lot of reform,” he says, remarking that Vietnam remains far behind Thailand in that respect.

Yet irrespective of frustrations experienced in every market, Mobius’ enthusiasm for Asian investments remains with the region experiencing continued economic growth and maintaining a low debt to GDP ratio.

But there are no golden pan-Asian rules. As for those to watch, he keeps his cards close to his chest. But some indications might be gleaned from the actions of India, China and Brazil – nations that are today’s leaders in the world’s emerging markets.