Franklin Templeton emerging markets specialist Mark Mobius says further quantitative easing in developed markets will see cash find its way into emerging markets.
Mobius (pictured), in the half-yearly report for the Templeton Emerging Markets investment trust, says the US Federal Reserve is likely to keep pumping money into the economy until unemployment turns around.
He says the European Central Bank, Bank of Japan and others have also continued with quantitative easing programmes
The fund manager says: “Those billions of dollars cannot all flow into what are perceived to be ‘safe haven’ assets such as US Treasuries and other government bonds, despite the general perception.
“In our view, further quantitative easing is very good for emerging markets because it means that there is a lot of cash in the system.
“As such, we expect more inflows into stock markets generally, including emerging stock markets.”
He says there are also positive signs from economic growth and demographics in emerging markets, with growing middle classes likely to boost domestic consumption.
Mobius says he has increased exposure to South Africa and Poland, between 31 March and 30 September, and made a new investment in Jordan. He made one sale during the period, disposing of Taiwan Semiconductor Manufacturing Co after reaching its analysts’ price target.