Friday, September 11, 2009

The outlook for emerging markets

Bull market:
There has been some excess in the rises that we have seen and therefore we can expect major corrections along the way. Nevertheless, we are in a bull market, which should continue for some time.

Internal growth:
Domestic consumption in emerging markets is rising rapidly and is gradually taking the place of exports

The Bloomberg quote was a misquote regarding my predicting a 30% decline. Bloomberg corrected that mistake and confirmed that what I said was that there could be as much as a 20% correction in the markets, though that would be a correction in a continuing bull market.

Mobius emerging market indicator:
The spread between emerging markets bond interest rates and US treasury bond interest rates is a good leading indicator. If the spread widens then that means investors are losing confidence in emerging markets and equity prices will probably decline. If the spread narrows then it is a sign of higher confidence, which leads to higher equity prices.

Mobius on Gold:
Along with other commodities, gold will continue to do well and maintain its historically high price. This does not mean it will move up dramatically higher but the upward trend is clearly in place.

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