Mark Mobius of Templeton expects emerging markets to grow 5.9 per cent in 2011
Mumbai: Emerging economies are expected to clock a 5.9 per cent growth while developed economies will see a 1.6 per cent growth, according to Mark Mobius, Executive Chairman, Templeton Emerging markets group.
Emerging economies have outperformed during a five and ten year period compared to developed economies. Since 1988, emerging markets had three short duration bear markets with an ability to withhold steeper downfalls compared to developed economies. Emerging economies have had long bull markets comparatively, he added.
“Emerging markets now have a share of 32 per cent of the world market capitalization. They have outperformed the developed economies during the last five and ten year period. "If you look at credit default swap spreads, investors are demanding 9% premium to hold government bonds in Greece, 6.5% in Argentina versus below 2% in emerging markets," he added.
He further said that foreign exchange reserves have been skyrocketing in emerging markets like China, Russia, Taiwan and South Korea since 2005 which gives confidence to investors. Another factor which makes emerging markets attractive according to him is the falling debt to GDP ratio of emerging economies compared to developed economies like Greece, Portugal and Ireland. “US and Japan have the highest debt to GDP ratio,” he added.
