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'Don't judge Zuma just yet'
19/03/2008 14:46 - (SA)
Tiisetso Motsoeneng
Johannesburg - Emerging markets guru Mark Mobius said on Wednesday that the potential South African president from next year, Jacob Zuma, should not be judged yet.
"I don't think Zuma should be judged at this stage," Mobius, who oversees US$43bn in emerging markets stocks at Templeton Asset Management, told I-Net Bridge on the sidelines of his annual presentation on Johannesburg.
Mobius learned the lesson not to make "snap judgments" from Brazil, where he was quick to get out following the election of the leftist Luis Inacio "Lula" da Silva in 2002 - but da Silva "surprised" with business-friendly policies.
Brazil is now the top-two investment destination for Mobius, below China and ahead of Korea.
Jacob Zuma, president of the ruling African National Congress, is poised to be become the country's president next year due to his party's electoral dominance, if he is able to come out clean in the pending corruption trial.
Some investors fear that Zuma, who is backed by leftists, might make economic changes that may jeopardise their investments.
EM stocks to fall 20% on US recession
Mobius says emerging markets are expected to fall 20% this year on the recession in the US.
Dismissing talk that the US was no longer the engine of world economic growth, or decoupling theory, Mobius said: "There's no such thing as decoupling - everything is coupled. World trade has increased, telecommunication is on an increase."
But he admitted that the knock-on effects of recession on emerging markets would not be as severe as was the case five or 10 years ago, citing increased demand from China and India.
Emerging markets fell 29% over a four-month period during the Gulf War in 1990, 24% over a period of five months during the Mexican crisis in 1995, 56% over a 13 month period during the Asian financial crisis in 1998 and 20% at the time of the Madrid train bombing in 2004, according to Mobius.
The Morgan Stanley Emerging Markets Index has fallen 22% on US recession fears, but Mobius said he did not believe there would be much of a decline from the present figure.
- I-Net Bridge
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