Veteran emerging markets fund manager Mark Mobius expects developing markets to outperform their developed counterparts in 2021 as lockdowns end by early next year and a COVID-19 vaccine becomes available. He said the outlook in both Turkey and South Africa is very good in terms of attracting investments for the next couple of years.
Governments in developed countries won’t be able to continue supporting economies as they have in 2020, the founder of Mobius Capital Partners, told the Reuters Global Markets Forum from Dubai late Monday.
China is recovering well, Mobius said at the Reuters Global Investment Outlook Summit 2020, adding he also expected India to return quickly to its previous rapid growth.
"India and China are the big ones for us now, but a lot of these other countries like South Korea and Taiwan are very significant; and then if you go to Turkey and South Africa, prospects are very good in a year or two from now."
Driven by fiscal stimulus and the lifting of virus-related lockdowns, Turkey’s gross domestic product (GDP) grew 6.7% year-on-year in the third quarter, after contracting by 9.9% in the previous three months when lockdowns were imposed to curb the initial coronavirus wave, according to Turkish Statistical Institute (TurkStat) data released Monday.
The burst of growth included a more than 15% jump from the previous quarter on a seasonally and calendar-adjusted basis, the data showed.
The country outperformed all G-20 nations, including China, whose economy rebounded by 4.9% year-on-year in the July-September quarter.
Eurozone GDP was 4.4% lower in the third quarter. Among other major economies, the U.S., France, Germany and the U.K. contracted by 2.9%, 3.9%, 4% and 9.6%, respectively, during that period.
In addition, South Korea's GDP was 1.3% lower compared with a year earlier, while Chile, Israel and Poland contracted by 10.3%, 1.4%, 1.5%, respectively.
Meanwhile, although Mobius did not expect everyone to get vaccinated immediately, he said just the availability of a vaccine would have "an incredible psychological impact," and he believed 2021 would be very good economically.
"My advice to people is to be diversified," he said, highlighting sectors such as cruises, travel and airlines that "have been completely bombed out" but have strong balance sheets and access to finance.
Mobius said sectors, including health care and education, that use technology effectively will be among the best performing in 2021.
He also said technology infrastructure companies, such as semiconductors and chipmakers, would remain attractive because of further growth in cloud computing and the demand for background instruments necessary for the expansion of the internet.
Mobius said sustainable investing, especially corporate governance, will become even more critical in the context of a post-pandemic recovery.
"When a company is faced with a COVID-19 downturn, the loyalty of (its) employees becomes much more important. Companies want to hang on to these employees even though they cannot pay them as much as previously, or even not at all," he said.