Dubai: The Templeton Group has been “paying increased attention” to IT companies in Emerging Markets covering the entire gamut from semiconductor manufacturers to internet sales firms.
The deep penetration of mobile phones in the developing world is spurring demand of Information Technology, for example mobile money transfer in Kenya to e-commerce initiated through smart phones.
“There are exciting developments in the internet space occurring in emerging markets that could result in bullish returns,” Dr Mark Mobius, Executive Chairman, Templeton Emerging Markets Group told Gulf News.
“We have been paying increased attention to IT companies, in view of their increased importance and their rapid growth,” he added.
Good 2017
For overall emerging market space, Mobius expects “2017 should be good because of the realisation among many investors that they are underweight emerging markets.”
The MSCI Emerging market index has gained 27.3 per cent in the past one year compared to 21 per cent gains in the Dow Jones Industrial Average during the same period.
“As far as political risks, those are always present, and those risks are increasing globally in both emerging and developed nations because of the spread of internet traffic and the increasing uptake of smart phones,” he added.
Iranian markets
Giving his insights on regional markets, Mobius said Iranian equity markets could be an important part of the frontier market line-up.
“It [Iran] is a very interesting market and if sanctions are lifted and international investors are able to invest,” Mobius said.
As far as the Saudi equity markets were concerned, Mobius said the recent visit by the US president Donald Trump has increased the saliency of the Saudi market to international investors.
“ ... and if the Aramco share sale goes forward along with increased privatisation of Saudi companies, that market could become one of the most exciting in the world,” Mobius said.
“The advantage of the Saudi market is that the possible interesting sectors cover the entire gamut from consumer to industrial so we are interested in all. As for the MSCI upgrade, it would, of course, increase the global interest in that market,” he added.
Analysts are expecting the MSCI to upgrade Saudi to an emerging market status by 2018, and expects a weightage of 3 per cent on the index. The UAE has a weightage of less than a per cent on the index.
Regarding the impact of the recent upgrade of Pakistani stocks, Mobius said the concentration risk would be minimal because of the deletion from frontier markets, contrary to what other market watchers had suggested.
“The transition of Pakistan out of the frontier market index will not necessarily mean a sudden deletion of that country from active frontier funds. That will be gradual, but there is enough growth in a number of other frontier market in that space. Therefore, the concentration risk will be minimal,” Mobius said.
