With stagflationary worries looming large, Indian investors have been on edge for some time now. However, Mark Mobius, founder of Mobius Capital Partners, on Friday, said that he doesn’t see a stagflationary situation in India. In fact, he expects a return of 15-20 percent from the Indian market. He shared further that he is looking to increase his exposure in India.
Mobius said, "From the Indian market, in a period of 3- 5 years, I would expect an average of 15 to 20 percent return because India is a fast-growing economy and there are lots of terrific companies."
"India can continue to grow rapidly, more than 5 percent annually, and perhaps even much greater than that. So there is no way you can define India as being in stagflation if they are growing at a rate. Of course, inflation will be higher, but I don't think it will get into double-digits at this stage of the game. So I don't think India is going to be subject to so-called stagflation," he explained.
Elaborating on the current market scenario in India, he highlighted that the number of active investors, who invest based on earnings of companies has increased. He explained that a lot of selling has happened mainly because people want to bet on safe havens now. He expects some of that money to move out of China and into India.
He said, "Active investors, people like us, who invest on the basis of not the index, but on the basis of earnings of companies and specific selection of stocks, that part is of course increasing in India. Also, you have got to remember that at the end of the day, we are in a situation with lots of money still sloshing around; despite the fact that central banks are pulling back, a lot of money is still out there looking for a home."
On money moving out of China, Mobius said, "A lot of money has already moved out of China, you have a situation where probably half of the money that goes into these markets, whether it be emerging markets or even developed markets, is indexed money in exchange-traded funds, ETFs. So as soon as China goes down, everybody has to sell because that is part of the game when you are indexing. You got to get out when the index is going down and that is what is happening."
"Some of that money, of course, is finding its way into India and to other emerging markets. You can see, Brazil is up, a lot of the markets in Asia are flat because India is down but not that much. So I believe that yes, some of that money from China is coming into India," he added.
Watch the video for the full interview.