Pessimism creates the best optimism in the long run — Mark Mobius, Executive Chairman, Templeton Emerging Markets Group

Emerging market guru, Dr. Mark Mobius, Executive Chairman, Templeton Emerging Markets Group, Franklin Templeton Investments, has been investing in global emerging markets for more than 40 years. He joined Templeton in 1987 and currently directs the Templeton research team, which is based in 18 global emerging markets offices, and manages emerging markets portfolios including Africa. Mark Mobius shares his views on the prospects and challenges in 2016 with Capital Markets in Africa.  

Retrospectively, in your opinion, what are the significant changes you noticed in 2015 in the global economy?

Mark Mobius: The most significant changes were, first, a slowing of the U.S. bull stock market. Then, the deceleration of China’s growth.  Finally, the strengthening of the US Dollar against almost every other currency in the world. 

What do you think will be the biggest potential challenge for markets in 2016 and its possibility impact on African markets? 

Mark Mobius: The biggest potential challenge has to do with confidence.  With the volatility experience thus far in the last three year, particularly in emerging markets, investors are fearful and thus are reluctant to invest seeking solace and presumed safety in US Dollar cash. This means that money is withdrawn from emerging markets and particularly African markets which may appear to be volatile and dangerous.  Thus, the impact on African markets will be a withdrawal of investments and lack of new investments.

What are the strongest short-term or long-term opportunities for braver investors in a volatile African market environment?

Mark Mobius: There are many opportunities in African markets but those opportunities are very company specific and can’t be generalized across any particularly country or sector.  Both short term and long term, those companies able to navigate the government policies in the various countries will be the winners. 

Mark Mobius: What challenges do foreign investors have to consider when investing in Africa and how to can they navigate these?

The main challenges have to do with government corruption and lack of predictability – the lack of adherence to fair and equitable law. Therefore, it will be very important for foreign investors to fully and deeply understand the intentions and actions of both national and local governments so that an accurate assessment may be made as to the risks inherent in any particular investment choice. 

Philosophically, does pessimism create opportunities or drive even the bravest investors away?

Mark Mobius: Pessimism usually creates the best optimism in the long run.