Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Fund Chief Sees Poor Prospects

Mark Mobius, president of the Templeton Emerging Market Fund, has been around the world five times already this year. In fact, this man who manages $9 billion worth of other people's money travels so much that the Franklin Templeton Group, his fund's parent company, decided to forget about frequent-flier programs altogether. Instead, they bought Mobius and his team of number-crunching cohorts their own Gulf Stream plane.


Mobius, who literally wrote the book in his field, "The Investor's Guide to Emerging Markets," finishes three days of meetings in Moscow on Wednesday, checking in on Templeton's Russia Fund.


Mobius, a frequent visitor to Russia, said he sees many positive changes in the investment climate here, but his review of the country is not overly optimistic.


"Russia has a long way to go," Mobius said in an interview Tuesday. "Unless the government forces companies to open up and treat shareholders as shareholders -- to be accountable to shareholders -- there's not much hope."


Many investors thought that Yeltsin's victory would bring Western funds flooding into Russia. So far, it hasn't.


"The market has pulled back from the euphoria from the day after the Yeltsin victory," Mobius said. "He's apparently in bad shape from what we're hearing ... the markets are very nervous."


If Yeltsin's health improves the market will become "buoyant," he said. But shares will suffer if the president's condition deteriorates and there is uncertainty about who would take over.


Mobius is a notorious risk-taker, managing funds for investors willing to wait five years for a return.


"My job is to take risks," he said. "If you are afraid of losing 20 percent of your money in a year, don't invest in emerging markets."


But he is wary of Russia. Of the $9 billion Mobius has invested in emerging markets -- low- and middle-income countries -- around the world, he has put only $100 million into Russia. Seventy percent of this money is invested in stocks -- mostly telephone, oil and electric companies.


"We could put $1.2 billion into Russia," he said. "But there are no shares available, there is no information available, and there is no willingness to give out information," he said. "There are some good bargains. But too many of the stocks moved up too far too fast."


Mobius thinks one of the biggest hurdles Russia has to get over is the 70-year-old Soviet mentality.


"It's going to take time to change attitudes. The whole idea of the outside investor is still very foreign. The investor is not your friend. Many of the companies are reluctant to have shareholders they're not familiar with. They want to know who is investing in their company."


Another area in Russia that Mobius finds problematic is the registration system. He says it is not being properly watched and companies are still controlling their own registries.


"I think there's a continuing interest in Russia but it will take probably five years for the market imperfections to be worked out of the system. The whole idea of ownership has to be dealt with."