Emerging markets guru targets Nigeria and Palestine for future returns

Mark Mobius, the veteran emerging markets fund manager at Franklin Templeton, is turning his attention to Nigeria and Palestine in his quest for new investment opportunities.

‘We’re going into Nigeria in a big way,’ said Mobius, manager of the Templeton Global Emerging Markets unit trust. ‘The population is growing at an average rate of 2.2% with an economic structure that shows incredible consumption’.

A frequent concern when investing in frontier markets is the quality of the management of the companies, however Mobius, who also manages the Templeton Emerging Markets investment trust, is undeterred when it comes to Nigeria as ‘by and large if you go into Nigeria and indeed Kenya, you’ll find a western-educated manager who studied at the London School of Economics or Harvard.'

He and his team are also looking to access the Palestinian market, despite its hugely volatile political situation.

‘The Palestinians are very entrepreneurial people, while two million people may not present a great market you have to take into account their ambition. The Diaspora around the world is also equal to the whole of Palestine.'

He continued: ‘Take for instance Rupert Murdoch, he was an Australian backwater newspaperman who went on to own one of the world’s biggest media corporations, what’s important is that he had ambition to grow, that’s why we go to places where no one else would go as we may find gems.’

‘Palestine for us is a viable market, we’re doing our research and looking at it as a real opportunity,’ said Mobius.

Other regions where Mobius thinks are showing promise include Thailand, Indonesia and Bangladesh.

Meanwhile, the current ‘avalanche’ of complanies floating on emerging markets stock exchanges (in initial public offerings known as IPOs) is a cause for concern for Mobius who believes they are fuelling a battle in the ‘supply and demand equation’.

‘Last year the total number of IPOs exploded, about $240 billion was issued. This year we expect double that with a lot more waiting in the wings’ he said.

However, in the long term Mobius believes the amount of investment seeking a home in emerging markets will increase as the average pension fund in the west invests only 3%-8%. He believes this bodes well for their stock markets.