Mobius reduces cash holdings

Franklin Templeton's Mark Mobius has reduced his cash positions over the past couple of months, sayi...

Franklin Templeton's Mark Mobius has reduced his cash positions over the past couple of months, saying he is positive on the prospects for the global economy.

Manager of the Emerging Markets Investment Trust, Mobius says he is "quite bullish on the future despite all the negative news" and predicts the beginning of a recovery in the second quarter of this year.

"Valuations look good and with interest rates at one or below and stocks yielding up to 20% on dividends this looks very tempting for investors," he says.

Mobius claims that while he is actively investing, others are not: "I don't think this is the consensus - people have the feeling we are nearing the bottom but they are not putting their money there. Bull markets are built on a bull market, not a bear market. However we are being proactive."

Having ramped up his cash allocations going into the big fall, Mobius started reinvesting in November. He favours energy and emerging market consumer stocks - including banks which weren't hit by the debt crisis - and maintains oil and commodities valuations are still strong. In the Emerging Markets Investment Trust - which holds 5.9% in cash - Mobius has allocated 10% to commodities (including oil) and 10% to consumer financials. "In Latin America and Brazil we like consumer banks as they have no exposure to sub prime," he explains.

Going forward Mobius is watching the environmental sector, where he says "interesting things are happening", particularly in alternative energy. "At the moment it is too early and we are just watching. Alternative energy companies have to be more fully developed; they need greater earnings and momentum. We will be looking to invest at the end of the year," he says.