Notes from Mark Mobius
There are many people who say that with the rapid increase in money supply, we’re going to see a return of inflation. We believe that inflation is a risk in India, as in many parts of the world, but that it will not happen suddenly and will take time to develop. One of the good things happening globally is the trend towards higher productivity. With higher productivity, inflation should not move up because goods are being produced at a lower price.
Given the large amount of liquidity in the market, we believe a Dubai-like situation or other corrections in the market might surface in some areas further down the road if over-spending and over-leveraging go unchecked. Despite this, we find that there are still opportunities in the market, and we are making some strategic investments in Indian companies.
Volatility resides in all markets and bad times can be good times for investors, which is why we always emphasize the importance of bottom-up research and looking at stocks on a company-by-company basis.