Mobius: Russia is at the top of my investment list

Franklin Templeton’s Mark Mobius has said Russia is his current emerging market of choice and suggested concerns over corporate governance are misplaced.

"Russia is at the top of our investment list these days, resources companies and the oil companies in particular", Mobius said, speaking to Investment Week.

Deepening investment within these sectors has proved problematic  for major investors such as BP this year, whose deal to explore the Arctic for oil with state-owned Rosneft collapsed. It was unable to reach an agreement with the co-owners of its existing Russian joint venture TNK-BP.

Mobius, however, said he had drawn positive conclusions from the affair.

"You cannot blame the Russian partners for getting angry at BP and Rosneft making a deal over their heads. People are going to have to learn the Russians are not going to be pushed around very easily. As an investor we like that kind of tense situation - people are looking after their interests."

On corporate governance as a whole, Mobius says Russia is "no worse or no better than anyone else, providing you have your eyes open".

Mobius also contrasted BP's struggles with the multi-billion dollar profit realised by ConocoPhillips last year when it sold out of its 20% stake in Russian oil producer Lukoil, and foresees further resource-based tie-ups in future.

"Russians do need investment, they do need external expertise to invest in the Arctic Circle, whether it be BP, Shell, or whomever. TNK-BP, which we hold in some of our portfolios, is actually turning out to be a very good company in the way it companies local knowledge with BP's expertise."

The manager of the $1.3bn Franklin Templeton Emerging Markets fund said companies such as miner Norilsk Nickel, financial institution Sberbank and natural gas giant Gazprom were particular favourites within his portfolios.

Mobius added to his resources positions across his portfolios as valuations became more attractive in the wake of May's commodities sell-off and said he was philosophical about the inherent volatility of such holdings.

"These days a 20% correction is nothing, or rather it is small change. That is the nature of the beast nowadays given the use of derivatives is so widespread. We have been very, very careful not to jump out of these things too soon".