Investment Guru Mobius Eyes The Gulf

On a visit to Dubai, Dr. Mark Mobius, Franklin Templeton’s Emerging Markets Group executive chairman and global management guru, revealed that — despite its emerging market problems — the Middle East and North Africa region offers unique opportunities for investment.

“The overall outlook for the GCC is excellent. There is a growing movement towards more entrepreneurship and private enterprise, which will drive the countries. Dubai, in particular, has shown the way with its forward-looking policies and openness towards the private sector and investment,” said Mobius.

Mobius is particularly bullish on the KSA market saying that, “Valuations in Saudi Arabia are cheap and when the market opens further, we will double our investments there.”

Mobius is also not deterred by the fact that despite being among the richest countries in the world, Saudi Arabia — like Qatar — is still placed in the frontier market bracket.

“We include in the frontier category those markets that have foreign investment restrictions, such as the case in Saudi Arabia and those that are relatively small such as Qatar,” he said. “Frontier does not mean ‘poor’ or ‘underdeveloped’ and any such attribution should be avoided.”

In what could be potentially hailed as a cause for celebration, Mobius also stated that he did not pay heed to rankings, such as the MSCI Emerging Markets Index, which has caused apprehension in the MENA region due to its exclusion of Qatar and Saudi Arabia.

“I think it is important to note that we do not follow the MSCI index categories and recommend that investors not pay much attention to such indices since they do not comprehensively reflect the situation in each country,” he said.

It’s a convenience to categorise countries in specific buckets, he added, but can be very misleading.

“The GCC is still a young, variable and fragmented market, where liquidity is not very high. Despite this, frontier funds are coming in especially from the equity side,” Mobius said.

In fact, Franklin Templeton currently has $40 million worth of equity funds parked in Saudi Arabia and $20 million in Qatar. This portfolio is widely expected to expand.

In order to cater to “the underserved Muslim population across the globe”, who according to Mobius stand at 1.3 billion investors, Franklin Templeton launched three new Shariah-compliant funds with a domicile in Luxemburg. The total fund size will be $30 million, with $20 million in the FT Global Sukuk Fund, $5 million in the Templeton Shariah Asia Growth Fund and another $5 million in the Templeton Shariah Global Equity Fund.

“The funds will focus on commodities, especially related to oil and petroleum, as well as consumer companies, including consumer banks,” added Mobius.

Mobius is also a strong advocate of investments into Asian markets, saying that they are growing at a rate of five times that of developed markets.

He is particularly bullish on China as a good market to enter as valuations are still worthy.

“China is a huge market and there are many opportunities in that market. Now that access to the A shares are becoming easier the pool of opportunities is growing,” he said.

Franklin Templeton has $1.1 billion worth of Shariah-compliant assets under management across the globe. Known for adopting a contrarian and bottom-up approach to stock picking, Templeton covers over 100 companies under its funds and clocks a historically low 20 per cent turnover rate.