Mobius Capital Partners is most bullish on India than it has ever been and deems it as the place to invest in emerging markets. “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 channel.
The fund’s current weight on India is 20% — the highest so far. The average weight over the last five years was in the range of 5-10%. He believes that India is the place to invest for global investors seeking exposure in emerging markets.
Mobius Capital’s recent bets in India include Persistent Systems. In addition, it continues to hold positions in Metropolis Healthcare and APL Apollo Tubes.
However, while the firm is looking at other software firms, it is particularly interested hardware companies. Mobius believes that Indian hardware is going to do very well as it is going to become a major manufacturer of semiconductors and other technology hardware.
But it is not too keen on banks, and prefers software, industrial and consumer as they are finding better value in those segments.
The fund is carefully watching for opportunities in recently-listed firms in technology space, some of them companies do not meet the return on capital criteria of at least 20%.
Mobius said that the US is now at the peak of interest rate cycle as the Federal Reserve is unlikely to increase the interest rates. He attributed to the fact that the money supply growth rate has come down drastically in America.
Even if the Fed decides to hike the rates, it will be very small. “Going forward it’ll probably be coming down.” Hence, 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,” added Mobius.
Indian bond market is expanding and with the country’s inclusion in JP Morgan’s index, it is going to be positive for some of the banks. Bonds and bank bonds are probably going to do well going forward, Mobius said.