The 30-share Sensex may have hit many all-time high levels in 2017, however, emerging markets veteran Mark Mobius says that Sensex could double from here within the next five years. “I think it could double over the next five years, driven by economic growth, reforms and privatization. Economic growth and reforms will be the theme of the market for the next one year,” Mark Mobius, Executive Chairman of Templeton Emerging Markets Group at Franklin Templeton Investments told Livemint.
“We are in the mid-way of a bull market the market could move 20% higher than levels seen in 2007,” he said to CNBC TV18 on Friday. Mark Mobius also called out for listing of more companies on the exchanges.”If you have thousands of listings, but if they are not liquid, it is very difficult to buy,” Mark Mobius said. Sharing his preference with respect to market capitalisation, Mark Mobius said that investors should bet on midcaps which are on their way to becoming largecaps. We take a look at why Mark Mobius sees Sensex doubling in the next five years.
Economic Growth
Mark Mobius sees India’s economic growth to take-off in the near future and believes that the the latest Moody’s rating upgrade could put the country at 10% growth levels. On the back of the development, Mark Mobius on Friday predicted India will now attract an increased amount of capital from the domestic and international investors. Further, the veteran investor says that while India’s equity markets are overvalued at current levels among emerging markets, investors are factoring in the the growth that they see going forward. “When they are valuing Indian companies, they are saying okay these companies may be growing at 20-30 per cent going forward and therefore we are going to upgrade our valuation,” he told CNBC TV18 on Friday.
Structural Reforms
Mark Mobius has time and lauded India’s structural reforms such as demonetisation and GST. In September this year, he said, “Just to get the tax reform through was quite an announcement.” In his recent interview he reiterated his belief saying, “GST implementation has been very complex and it’s beneficial if more power is given to the state.” The investor had also lauded Prime Minister Narendra Modi for his efforts. “ I think he’s (Narendra Modi) doing very well in the face of terrific odds. Let’s face it, it’s not easy. You have all these states with individual parliaments, who don’t agree on one thing or the other,” ho told Bloomberg in a recent interview. On demonetisation, he observed, “I think demonetisation was just a way to signal to the people that we are moving to the digital world, and everyone needs to get used to it.”
Privatisation and growing population
Pointing to the way ahead,Mark Mobius says that India must look at privatisation of state owned-enterprises. Sharing his reforms wish list from the government, Mark Mobius told Livemint, “Faster privatization, to move the infrastructure programme ahead.” Giving the investors a glimpse into the future of stock markets across the world, Mark Mobius says that emerging markets may be redefined to be called high-growth countries in the next ten years as they are slated to see a lot of demand for consumer durables due to the burgeoning population. Writing specifically about India and China, Mark Mobius explained, “Well, look five or 10 years from now, you’re going to see these consumer markets become bigger than what you see in Europe, in the US. Because look, China, and India each have a billion people and their incomes are rising,” Mark Mobius noted in a recent blog.