Stocks in China and India offer "good bargains" after benchmark indexes in the nations declined more than any other major market this year, Templeton Asset Management Ltd's Mark Mobius said.
"We've been rearranging the portfolio based on valuations, which have come down pretty dramatically in places like India and China," Mobius, who oversees about US$47 billion of emerging- market equities as executive chairman of Templeton, told Bloomberg News. "There have been big declines."
Mobius joins investor Jim Rogers in favoring Chinese stocks after they plunged 46 percent this year. China and India, the two most populous nations, are the worst performers among the world's 20 largest stock markets as soaring raw material prices and slowing economic growth weigh on profits. Last year, China's main index surged 162 percent and India's advanced 47 percent.
China's CSI 300 Index is valued at 21 times reported earnings, near the lowest in more than two years, and down from a peak of 53 times in October. In India, the Sensitive Index is trading at 14 times reported earnings, down from a high of 31 earlier this year.
"Markets like China and India are no longer expensive but neither are they cheap," said Leslie Phang, the Singapore-based head of investments at the private-clients unit of Schroders Plc, which oversees about US$260 billion globally. "In the longer term, is earnings growth in those markets sustainable? We're still unconvinced that we're out of the woods."
'Don't give up'
Rogers, who said he hadn't sold any of the Chinese equities he started buying in 1999, told investors on June 28 not to "give up" on the nation's stock market.
Marc Faber, publisher of the Gloom, Boom & Doom Report, disagrees. The investor who advocated bailing out of US stocks before 1987's so-called Black Monday crash and correctly predicted last August the US would enter a bear market, said on July 4 that investors betting on a rebound in China's tumbling stocks are setting themselves up for more losses.
