Mark Mobius expects money to keep flowing to stocks even if Fed

Emerging markets investor Mark Mobius told CNBC on Wednesday he expects money to continue finding its way into equities even if the Federal Reserve tightens its highly accommodative monetary policy later this year.

“If the money is going to be pulled out of markets generally, then that’s a risk. But what I see is that the Fed is moving very, very slowly. That’s one thing. The other thing is that it’s no more about the Fed. It’s about money supply generally,” Mobius said in an interview on “Closing Bell.”

The Fed is likely to start cutting back on its monthly bond purchases in a process known as tapering at some point before year-end. The U.S. central bank is currently buying $120 billion a month of bonds, part of an emergency policy regime put in place last year as the worsening Covid pandemic unsettled financial markets and damaged economies.

Investors are bracing for a shift in Fed policy, with some Wall Street strategists believing the commencement of tapering could cause a notable pullback in stocks.

Mobius suggested markets should be able to weather any storm.

“If you look at the fact that money supply is up 30% only in the U.S., you’ll realize that globally we have a lot of money sloshing around, and I think that money is going to continue going into the markets,” said Mobius, founding partner of London-based Mobius Capital Partners. “And don’t forget all of the cryptocurrencies creating lots of liquidity as well.”

Mobius, who had a long career with Franklin Templeton before starting his eponymous investment firm, also told CNBC he sees further upside for stocks in India, even as two key indexes in the country — the NSE Nifty 50 and benchmark S&P BSE Sensex — sit near record levels.

In May, Mobius indicated he still liked stocks in the South Asian country despite its Covid outbreak at the time.

“If you compare India and China, it’s amazing. One market is going in one direction, the other one is going the other direction. India is outperforming not only China but even the U.S.,” Mobius said Wednesday.

The S&P Sensex is up more than 47% in the past 12 months, compared with the S&P 500’s roughly 28% gain in that same span.

“It’s quite amazing, and I think you’re going to see more and more of that going forward, not only in India, but countries like Brazil and other emerging market countries coming back finally,” Mobius said.

At the same time, Mobius said he believes some Chinese stocks have been punished too much by investors in response to Beijing’s regulatory crackdown in recent months.

“With this downturn in China, actually it provides an opportunity,” he said. “Yes, we’re overweight in India, but we’re still in China because there’s some great pickings.”

Watch the interview with longtime investor Mark Mobius above.