india vs china: Generally speaking, we are finding that people are down on China and up on India: Mark Mobius

“Fear of inflation and therefore fear of high interest rates will continue to haunt market for next 6-12 months,” says Mark Mobius, Partner, Mobius Capital Partners.

When you speak to your clients and your investors, are they looking at pulling out of their commitment from China? Are they ready to buy into Indian equities even at these historically high averages or even at a time when market valuations are above average?
We must remember that the reciprocal of the price earnings ratio is the inflation rate of course, so as inflation rises, as interest rates go up the PE ratio has to be adjusted. But generally speaking, we are finding that people are down on China and up on India and the reason for that is that so many of them have been burnt with their investments in China. In fact, we were in a meeting recently and the first thing the client said was do not talk to us about China. So a lot of big institutional investors have been burnt badly in China and therefore they are avoiding it and of course there are other countries they want to go to.

As we look into the future, on one side there is inflation challenge and on the other side, there is fear of a hard landing/recession. What would be the dominant feature that will influence the script of our financial markets for the next 6 to 12 months? Will it be fear of inflation or will it be fear of recession?
I think it would be fear of inflation and therefore fear of high interest rates. The central banks will continue to raise interest rates and therefore concomitant to that is of course inflation so inflation continuing at higher level then they will assume that interest rates will continue to go up and that will be bad for the markets at least temporarily and by the way very important to look at the historical perspective because high interest rate do not necessarily always mean low equity markets so we have to look at that very carefully, of course the impact on bond markets is very high but on equity markets it is something different.

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Read Also: What is the biggest risk in the market now?

Equity investing is all about long-term planning but I want to understand from Mark Mobius my friend is that Mark Mobius is not 60 plus he is 80 plus and he is still going; he is one of the most brilliant investors I have met. You are actively investing, you are actively travelling. What keeps you going?
I think it is curiosity. I love to learn new things. I love to visit places to see what is going on in different countries and that is what really keeps going. The curiosity that I have is unending. I continue to find new ideas, new concepts, new products that interest me. For example, I was in New York at The Metropolitan Museum of Art and I was really fascinated by how archaeologists are now reconstructing how statues in the past were actually because you go to a museum and you see these bits of marble statues and you forget that these statues were painted originally. Now archaeologists are beginning to reconstruct that so to me that is the kind of thing that is very interesting to me.

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So if Mark Mobius of 2022 met Mark Mobius of 1985, what will you tell him?
I would tell Mark Mobius to continue to do things that you love, do not do things that you are not interested in or that you do not love; avoid drudgery, keep happy about things that you are learning and continue to learn. That is the key.

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