Mobius Capital Partners is more optimistic than ever before about India as an emerging market investment destination. “We believe that the opportunities in India are terrific and the whole picture is so positive that it doesn’t make sense to reduce holdings in India,” Mark Mobius, founding partner of Mobius Capital Partners LLP, told CNBC-TV18 station.
India now accounts for 20% of the fund, its highest allocation ever. Over the past five years, the typical gain or loss in weight has been around 10%. He believes that foreign investors who want to get a taste of emerging markets should look no farther than India.
Persistent Systems is one of Mobius Capital's most recent investments in India. APL Apollo Tubes and Metropolis Healthcare are two more companies in which it maintains a stake.
Although interested in other software companies, the company is more keen on acquiring hardware businesses. Mobius predicts that India will soon become a big producer of semiconductors and other technology gear, which will bode well for the country's hardware industry.
However, the firm is less enthusiastic about the banking industry and more interested in the software, industrial, and consumer sectors.
The fund is keeping a close eye on newly-listed technology businesses, many of which do not yet satisfy the return on capital criteria of at least 20%.
Since the Federal Reserve is unlikely to raise interest rates, Mobius claims that the United States has reached the apex of the interest rate cycle. He said it was because of the sharp decline in America's money supply growth rate.
If the Fed does decide to raise rates, it will be a minor increase at best. Going forward, it's likely to decrease. Because of this, Mobius argued, "it does not make sense for investors in the long term, in a period of three to five year-view, to reduce holdings in India unless they are devoid of cash."
Some financial institutions will benefit from JP Morgan's decision to include the Indian bond market in its index because of the country's growing bond market. Mobius predicted that bonds and bank bonds would do well in the future.
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