Mark Mobius believes ESG will roar back after coronavirus crisis

25 Apr, 2020 10:44

Singularity Financial Hong Kong April 25, 2020 – by Zohar Lee

Mark Mobius, the emerging-markets investing pioneer, is confident the world economy will bounce back from the COVID-19 pandemic and offer investors a round of bargains—but sees the potential for another round of pain.

In a recent interview via a Zoom conference call from his hotel room in Durban, South Africa, Mobius said he suspects the stock market will see a W-shaped recovery. That means the rebound off the March lows will likely be followed by a retest of those levels before finally proceeding back to the previous highs and beyond.

Mobius said he thinks those factors will eventually set the stage for a “very bullish environment,” but that investors are unlikely to shrug off ugly economic news and earnings that will inevitably be seen in coming quarters.

“So what I’m saying is that a lot of the damage that’s being done to balance sheets, to sales, to profitability, etc., has not really been realized,” Mobius said. “In other words, the realization will come when the companies announce their earnings next year or the end of this year. I think as the news filters out, gradually, that people will have second thoughts.”

Over the long term, Mobius emphasized that he is “very optimistic” markets will bounce back after creating “incredible bargains.”

Mobius Capital Partners, which he co-founded in 2018 after building his fame running emerging-markets investments at Franklin Templeton for more than three decades, is focused on investments that enhance environmental, social and governance, or ESG, standards. Mobius last year co-wrote book, “Investing for Good,” on ESG investing along with his Mobius Capital Partners co-founders Carlos von Hardenberg and Greg Konieczny.

The market crisis has put ESG somewhat “in the back seat,” with investors focused elsewhere, Mobius said. But that’s not likely to last.

“I believe the whole environmental issue is going to come roaring back after we’ve solved these immediate problems,” Mobius said.

For oil exporters like Nigeria, the collapse in crude prices is bad news, but “for the big importers—China, India, Turkey and a bunch of other emerging-market countries—the news is very good and, in fact, that is one of the bright spots,” Mobius said.

China looks set to recover quickly from the pandemic, he said, while India, now among the worst-hit countries, should present opportunities because countries that suffer the most in a downturn can provide the greatest opportunity over the longer term “assuming that we see the end of this by the end of this year.”