According to Dr Mark Mobius, director at Templeton Asset Management Ltd, Stocks in China and India offer “good bargains“ after benchmark indexes in the nations declined more than any other major market this year.
“We`ve been rearranging the portfolio based on valuations, which have come down pretty dramatically in places like India and China,“ Mobius, who oversees about $47 billion of emerging- market equities as executive chairman of Templeton, said late last month.
Mobius joins investor Jim Rogers (previously co-manager of the Quantum Fund together with George Soros & author of the book “Investment Biker”)in favoring Chinese stocks after they plunged 46 percent this year. China and India, the two most populous nations, are the worst performers among the world`s 20 largest stock markets as soaring raw material prices and slowing economic growth weigh on profits. Last year, China`s main index surged 162 percent and India`s advanced 47 percent.
China`s CSI 300 Index is valued at 21 times reported earnings, near the lowest in more than two years, and down from a peak of 53 times in October 2007. In India, the Sensitive Index is trading at 14 times reported earnings, down from a high of 31 earlier this year. That compares to a multiple of about 22 times for the Standard & Poor`s 500 Index in the U.S.
Rogers, who said he hasn`t sold any of the Chinese equities he started buying 1999, told investors on June 28 not to “give up“ on the nation`s stock markets.
Marc Faber, publisher of the Gloom, Boom & Doom Report, disagrees. The investor who advocated bailing out of U.S. stocks before 1987`s so-called Black Monday crash and correctly predicted last August the U.S. would enter a bear market, said on July 4 that investors betting on a rebound in China`s tumbling stocks are setting themselves up for more losses. Since then, the CSI 300 has gained 6.2 percent.