Mark Mobius sees euro crisis end by June

Friday, 23 December 2011 00:50 - - {{hitsCtrl.values.hits}}

Reuters: Mark Mobius, the Franklin Templeton executive who pioneered emerging markets investing, expects Europe’s debt crisis to be resolved in the middle of next year, sparking a rise in global bourses, Brazilian newspaper Valor Economico reported on Wednesday.

Mobius, who as chairman of Franklin Templeton’s Emerging Markets Group oversees $50 billion in investments, said investors were overstating the potential impact of the crisis. He warned, however, that the size of derivatives contracts tied to European sovereign debt offered real risks to investors.

“The European crisis isn’t as deep and terrible as people think,” Mobius was quoted as saying by Valor. “Nations there are in a process of negotiations and that takes time.”

Brazil “is in a very good situation,” Mobius said, likening the largest Latin American economy to that of the United States. In his opinion, a strong consumer base and economic diversification will prove crucial to Brazil’s resilience if things worsen globally, Valor added.

The country “is a little like the United States. They can isolate themselves from crises since they have a big consumer market, they produce raw materials, they have industry and agriculture,” Mobius said in the interview.

While the Chinese economic expansion will likely continue at elevated rates, there is concern over the potential formation of bubbles in the real estate market in the world’s second largest economy, Mobius told Valor. China is Brazil’s largest trading partner.

Mobius said investors have pulled out of emerging markets less than during the 2008 crisis that followed the collapse of Lehman Brothers, but the underperformance of emerging market stocks this year will set up a recovery in 2012.

Franklin Templeton is a unit of Franklin Resources Inc.