india vs china: Generally speaking, we are finding that people are down on China and up on India: Mark Mobius

“The fear of inflation and hence the fear of higher interest rates will continue to haunt the market for the next 6-12 months,” says Mark Mobiuspartner, Mobius Capital Partners

When you talk to your customers and your investors, are they considering exiting China out of their commitment? Are they ready to buy Indian stocks even at historically high averages or even at times when market valuations are above average?
We must remember that the reciprocal of the price-earnings ratio is almost certainly the inflation rate, so as inflation rises, the PE ratio has to adjust as interest rates rise. But generally, we are seeing that people are over China and over India and it is because many of them are burnt out by their investments in China. In fact, we were in a meeting recently and the first thing the customer said was not to talk to us about China. That’s why a lot of big institutional investors in China are badly burned and that’s why they’re avoiding it and of course there are other countries they want to go to.

As we look into the future, there is the challenge of inflation on the one hand and the fear of a hard landing/recession on the other. What will be the key feature affecting the script of our financial markets for the next 6 to 12 months? Will it be the fear of inflation or the fear of recession?
I think it would be the fear of inflation and hence the fear of higher interest rates. Central banks will continue to raise interest rates and so there is certainly inflation with it, so if inflation continues to be high, they will assume that interest rates will continue to rise and that will be bad for the markets, at least temporarily. It is very important to look at the historical perspective because higher interest rate does not always mean lower equity market, so we have to look at it very carefully, of course the impact on bond markets is very high but on equity markets it is somewhat different.

Also read: What is the biggest risk in the market now?

Equity investing is all about long term planning but I want to understand from Mark Mobius that my friend is that Mark Mobius is not 60 plus, he is 80 plus and he is still going; He is one of the most wonderful investors I have met. You are actively investing, you are actively traveling. what’s going on?
I think it’s curiosity. I like to learn new things. I love traveling to places to see what’s happening in different countries and that’s what really keeps going. The curiosity I have is infinite. I keep getting new ideas, new concepts, new products which interest me. For example, I was at The Metropolitan Museum of Art in New York and I was really fascinated by how archaeologists are now reconstructing how statues in the past really were because you go to a museum and you see marble. Look at these pieces of sculptures and you forget that these sculptures were originally painted. Now archaeologists are starting to rebuild it, so that’s something that’s very interesting to me.

, Back to recommendation stories

So if the Mark Mobius of 2022 met the Mark Mobius of 1985, what would you tell him?
I’d tell Mark Mobius to keep doing the things you love, don’t do things that don’t interest you or that you don’t like; Avoid hard work, be happy about the things you are learning and keep learning. That’s the key.

Originally published at Pen 18