May 28, 2020
In SVCA's exclusive One-on-One interview with Mark Mobius, he tells us:
#1 This time is not that different
History shows bear markets follow a similar pattern: sudden, shocking, worrying so people hold back, missing out on opportunities to buy when prices are low. This bear market is however far more global as markets are more intertwined than before.
#2 Dramatic V-shape recovery has started
Expect dramatic recoveries around the world when the lockdown ends as public markets have rebounded by some 20%. Pull-backs in the market to be expected, in the climb up the wall of worry.
#3 Economic shrinkage will exaggerate 2021 growth
If people are not going to work, not buying as before, negative growth or economic shrinkages can be expected throughout the world in 2020. Next year, growth will be incredible if you get a mere 1 percent growth if this year you get negative year.
#4 The Inflation Myth amidst deflation
The world is in a deflationary model globally, mainly due to technology where services and products are cheaper and better. Even if prices are going up, it's not inflation, it's money printing. Equities are a good bet as prices are inflation-adjusted.
#5 Currencies are devaluing
Money printing is devaluing currencies. Combined with Bitcoin and other creative currencies vying - nobody knows how much the money supply really is. Put at least 10% in physical gold.
#6 Unemployment rising
As a result of technology, companies are realising they don’t need as many workers as before. And bankruptcies will also exacerbate unemployment - a rising problem for governments to tackle, which will also fuel political tensions.
#7 Create jobs, build infrastructure
Multilateral agencies should therefore facilitate construction of infrastructure to create employment. Franklin Roosevelt's make work program during the Great Depression years (1933-1939) created employment as helicopter money (stimulus) can only alleviate the COVID-19 situation somewhat.
#8 Bottom-up approach over picking markets
Better to pick good companies than pick markets/countries. Currently invested in China, India, Korea, Taiwan, Thailand, Turkey, South Africa, Brazil and Poland. Investments in SE Asia to increase especially Vietnam and Indonesia. Sri Lanka has a good chance to become an important equity market.
#9 Healthcare, Technology and Consumer are top sector picks
Retain focus on the Consumer who can be served online and offline.
#10 Everyday is a new normal
There’s not going to be a new normal. Things are changing everyday; the challenge is to adjust to new normals everyday.
Global trade will continue to grow, companies will diversify their suppliers beyond China.