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Markets  |  January 11, 2013 06:11:04

Mark Mobius responds to readers' questions of your blog

World investment in emerging countries discover more than 25 years. People often ask me if I am traveling tiring. I have to say absolutely not. It's not always easy to be constantly on the road (or in the air), meeting people from around the world and listening to their life stories, however, gives me energy. Even if I can not meet all the readers of my site or follower on Twitter personally, I appreciate the feedback. So please read some answers to some recent questions. Thank you for your time spent sharing your opinions from around the world.

Do you think that it should be Egypt, in the light of recent developments in the country, CIVEST removed from the group (a group of developing countries, including Colombia, Indonesia, Egypt, Turkey and South Africa)?

Michael Argentina

I visited Egypt in December. I found that despite political unrest is daily life in this country on. Our team visited several local companies, some of them seem to be doing very well. We must realize that we learn from the headlines just a part of what is currently happening in the country. We are not fans of the consolidation of individual countries and their economies into one entity. In future, we will continue in Egypt in search of new opportunities. As for Chile, it was, as we gradually found a lot of companies who have fared particularly well, our favorite. Peru has had problems in the mining sector, we think, however, that this country is still an attractive investment potential, although offers fewer opportunities than Chile.

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I am of the opinion that Indian stocks are overbought and that recent reforms are insufficient. How do you assess the current situation in India You?

Akeem, India

We agree that a lot of Indian companies traded at high prices. Counterproductive government policies and the recent corruption scandals in the last year, however, caused a decline in the market, thanks to which the prices of some companies acceptable. It also seems that the Indian government has recognized the negative impact of their policies on the market, and it has changed its position to allow access of foreign companies in the sector of detail. I think this change will have a positive impact on the further development of the country.

What do you think of the MENA region (Middle East, North Africa), especially on Egypt these days? From the quick glance I think it is Egypt nediverzifikovanějším market in the region, which enjoys favorable demographic structure.

George, USA

Because of negative news coming out of Egypt, a number of markets become more attractive in terms of valuation. Attractive valuation then not only Egypt, but also other parts of the MENA region. Unrest in North Africa, in some cases it creates increased interest, particularly investors from North Africa, the investments in the Gulf countries, namely the United Arab Emirates and Dubai.

We have friends in Africa (one Nigerian and one U.S. citizen living in Jos, Nigeria). Both are optimistic regarding the further development of markets in Africa in general and specifically in Nigeria.But they are concerned about the threat but which is Boko Haram, which seeks to introduce Sharia law here and that intimidates the local population provoking conflict. This does not benefit else on growth-oriented approach of the country. You can share with us your views on the current situation and investment in Nigeria and Africa in general?

Dave, Sweden

What is going on in Africa and Nigeria in particular is concerned, we are also optimistic. There is no doubt that Boko Haram can create problems, it does so not only in the northern part of the country where there is a large group of Muslims. The impact of his actions on the southern part of the country in which lies the city of Lagos, the financial and commercial center of the country is minimal. In Nigeria, we have seen a lot of companies which fared quite well, as the whole country moves forward.Our current plan is to continue to seek investment opportunities not only in Nigeria but also in other parts of Africa, such as Ghana, Kenya, South Africa, etc.

Experiencing agony every time I look at indices Sensex and Hang Sen and I see that it is still much lower than two years ago. According to current estimates, China's GDP grew last year by 7.5%, U.S. GDP by 2%. Looking at the performance indices Sensex and the Hang Sen against the S & P 500, however, is not known. It seems that the short-term downward trend in emerging countries become long-term, despite their rapid economic growths. Perhaps we should consider our stay in these markets. What is your opinion?

Rajdej, Switzerland

In fact, if you look at the ten-year period ending in 2012, as a whole, developing countries surpassed those developed in 8 of the 10 calendar years. In 2011 we felt lagging emerging markets, which was largely due to the new primary offering (IPO), which was on the secondary market for the shares spent a great deal of money. Last year, however, we have witnessed a general improvement in the development in the future of these markets so I optimist. Remember that historical results does not guarantee future returns.

I agree with the fact that investing in frontier markets (a subset of emerging markets) are over the long haul. What worries me, however, is the fact that the story of the growth of these countries is based largely on commodities.For example, in Saudi Arabia, the largest revenue generating oil, then gas in Qatar. If the mining industry affected, the remaining sectors of the economy can not sustain. In view of this makes sense to me to invest in companies with strong international representation (despite the weak global perspective), or invest in the growth story of the company in the domestic market.

Rachit, India

In fact, it's not the mining companies that are in the emerging markets seem interesting, but it's banks and telecommunications. A large part of the population in these markets still does not have a bank account, so the growth potential is large banking. Emerging markets are also strongly affected by the wireless revolution, which is now growing demand for both mobile phones and mobile service operators.

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The article was translated and reproduced with kind permission of Franklin Templeton Investments' Mark Mobius from the blog

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