Emerging markets have outperformed 61% of the time in 28 years: Mark Mobius

Mark Mobius

Emerging markets have outperformed developed markets 61 per cent of the time in the last 28 years, which is why there is a tremendous growth in the investor interest in those countries, said  Mark Mobius, iconic investor and Executive Chairman, Templeton Emerging Markets Group, Franklin Templeton Investments, at Asia PE-VC Conference at Singapore today.

“Except for the last three years, out of the 28 years, about 61% of the time emerging markets have out performed the developed markets, so in the long term it’s not too bad,” Mobius said in his key note address. “One of the reasons why there is growing interest in the emerging markets is that they are out performing the developed markets including the US,” he added.

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CHART 1 {Emerging Markets: Performance Since 1988}

And, of all the emerging markets, the Asian markets have emerged in the spotlight for growth and investments. While overall growth in the emerging markets has slowed down, emerging Asia has grown at an average of 7.9 per cent in the last decade, much faster than other regions.

In 2016 itself, it is expected that India, China and even the ASEAN region will top the charts of GDP growth rate beating the global average and even developed markets like US, Europe and Japan.

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Franklin Templeton has been investing in the emerging markets for nearly three decades. Recalling the time when the firm launched its first emerging Asia fund in 1987, Mobius said, “We had $100 million and we did not know what to do with it. There were five markets where we could invest. Now we have $28 billion and 70 markets in which we can invest. So, things have really changed.”

According to him, while the overall performance in the emerging markets has slowed in the last three years, apart from India and China, ASEAN countries including Myanmar, Laos, Cambodia, Philippines, especially Vietnam are growing fastest.  “Private equity companies will want to look at those countries closely, we are,” he said.

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In September 2015, Vietnamese logistics firm Indo Trans Logistics Corporation (ITL) in a media statement said it had secured $15.8 million from TSEM IV. The $220 million fund provides growth capital to small and mid-sized companies across emerging markets in China, India and Russia, the statement added. A month later, TSEM IV participated in a $15 million funding round for Vietnam’s major restaurant chain operator Huy Vietnam Group, the company had announced.

While the growth might have tapered in the last few years, number of listed companies and total market capitalisation of those companies in the emerging markets are the reason why Mobius says that he suggests investors to give around 20 per cent weightage to these markets,

In SEA, Mobius has focussed more on PIPE (private investment in public equity) companies or deals. Such companies are already listed or at the pre-IPO stage from where they are able to go public quickly.

Private Equity making a strong comeback in Southeast Asia, says iconic investor Mark Mobius

“Lots of opportunities for private equity in those exciting areas, is one of the the reasond that we do a lot of PIPE deals,” he said.

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Chart 3 {EM Private Vs Public Equity}

Talking about sectoral opportunities, Mobius said, in public equity the biggest sectors are financials, technology and consumer, but in private equity area is more in consumer, which is a very exciting area, particularly now.

Financials account for around 28 per cent consumer around 18 per cent of public equity in emerging markets for private equity it is dominated by consumer which hold around 46 per cent share as compared to 16 per cent in financials.

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.