Equities will spur growth says investment guru
Manama, November 25, 2010
Equities are where we will see growth in the future, delegates at the World Islamic Banking Conference (WIBC) were told by investment guru Mark Mobius on the closing day of the conference.
Mobius, an investment expert with Franklin Templeton Investments, was speaking on the theme 'Shifting perspective from crisis to recovery to sustainable growth'.
'Equities make up about 35 per cent of all asset classes but that is where I think we should be looking for growth,' he said.
'I can see a shift from this being dominated by institutional to retail investors which will drive growth.
'Islamic funds now amount to $480 billion, so there is a lot of scope for growth from both retail investors in emerging markets as well as sovereign wealth funds.
'Emerging markets outlook is good as they have been outperforming established markets for some time,' he said.
'Equities in emerging markets are also likely to be driven by IPOs and secondary issues.
'This year I would expect IPOs to surpass the bull market in emerging markets when they reach $236 billion. We are looking at around $400 billion this year with a further $240 billion in the wings.
'Emerging markets are likely to outperform by about three times with China looking at 10 per cent economic growth and India 8 per cent,' he added.
'The emerging markets have all built up reserves far greater than the developed markets.
'Since the Asian crisis these markets have been aware of debt danger and have been reducing it as a percentage of GDP, while Western markets debt has been increasing as a percentage. They also tend to enjoy single-digit interest rates and inflation,' he added.-TradeArabia News Service