International Investment's one-day offshore forum held in South Africa in October attracted 261 of So...
The following pages give highlights of the main speeches of the day delivered by top fund managers from MFS, Martin Currie, Franklin Templeton, Barings, Irish Life International, Sarasin, Mellon Newton, Invesco, Fidelity, Investec and Rothchild Asset Management. Conference topics ranged from the outlook for the US equity market plus Asia and Europe. Also covered were thematic investment, the multi-manager approach and investing on a global basis.
One of the opening speeches was by Dr Mark Mobius, president of the Templeton Emerging Markets Group.
"There is very dramatic upside potential yet to be achieved. Admittedly some of these markets went pretty wild at the peak and investors are starting from a relatively low base, but we believe that it is pretty certain that over the next few years they will get closer to where they were. The percentage increase they have to achieve is quite dramatic - Thailand 800%, Indonesia 400%, Philippines 280%, Malaysia 145% and Russia 138%."
Mobius continued: "Brazil, for example, came down by 70% and then recovered by over 149%. I think you will be seeing that in the Asian markets."
Emerging markets have suffered from negative investor sentiment for several years, but Mobius believes growth in emerging markets is now on track. Inflation is generally falling, commodity prices are up and currencies have stabilised, but are at the same time undervalued. As a result, foreign reserves are improving and yield spreads are narrowing.
Emerging market interest rates are falling from the high points they reached during the Asian crisis and with valuations at bargain levels, a rise in US interest rates is unlikely to knock the long-term growth potential for emerging markets off its current course of good performance.
Mobius projects economic growth is likely to grow further despite recent high levels of 3%-4%. "We expect growth next year of 5% for emerging markets generally," he said.
Currencies are also undervalued according to Mobius. "We calculate the South African Rand is undervalued by 34%, India Rupee by 29%, Thailand Bhat 26%, Malaysia Ringit 22% and Korean Whan by 21%."
The dramatic increase recently in equity placements by emerging market companies signals increased flows into mutual funds.
Apart from the main speeches, delegates could also attend a range of breakout seminars from additional speakers including PBA Capital and Global Asset Management (GAM). Martin Harrison, director of mutual funds at GAM outlined the principal characteristics of a range of hedge fund strategies.
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23% fall since Q1
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Including advice firm Chadkirk WM