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Exclusive | Mark Mobius, ‘father of emerging markets’, says it’s time to buy small Chinese stocks as market reaches bottom
- ‘We are probably reaching the bottom or near the bottom and the market is probably going to recover’, Mobius says
- Investors should resist the temptation of using index funds – ones that invest according to the weightings of an index – to return to the market, he warns
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China’s stock market is likely to have reached the bottom, according to Mark Mobius, dubbed the “father of emerging markets”.
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But investors should resist the temptation of using index funds – ones that invest according to the weightings of an index – to return to the market, he warned.
Rather, they should focus on individual small and mid-sized companies that demonstrate good earnings prospects and carry low debt. These are the stocks that will be benefit from new regulatory policies, he said.
“Obviously, the Chinese government wants the market to perform better. We are probably reaching the bottom or near the bottom and the market is probably going to recover,” Mobius said in an exclusive interview with the South China Morning Post.
The MSCI China Index, which tracks 738 stocks, fell 14 per cent in the first quarter, adding to a 21.6 per cent slump in 2021.
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Beijing’s sweeping crackdown on the technology sector that began last summer, coupled with the risk of Chinese companies being delisted in the US and fears linked to Russia’s invasion of Ukraine, formed a perfect storm that knocked US$1.9 trillion of market value off the index members in a 15-month period.
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