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Mark Mobius says hedge funds to target Pakistan

Date: Wednesday, January 2, 2008
Author: Miles Costello, Times Online

One of the world's most respected emerging market investors has pledged to keep his funds in Pakistan despite the turmoil unfolding in the country following last week's assassination of former prime minister Benazir Bhutto.

Mark Mobius, who runs the $1.5 billion Templeton Emerging Market Investment Trust, also predicted that hedge funds would now move in to try to take financial advantage of the situation.

Speaking from his Singapore offices as the Pakistan stock markets tumbled 5 per cent, Mr Mobius said he was feeling "pretty sanguine" about events and said it was likely that stability would return.

He urged the Pakistan Government to press ahead with the previously planned general election, called into question following the death of Ms Bhutto. She had been tipped as a likely winner.

"Yes there will be volatility. True, the political situation is bad, but at the end of the day I’m pretty sanguine,” Mr Mobius said.

“We’ve been there at least 15 years now; we’ve been in and out, but recently we’ve seen some good opportunities.

“If you look at the companies and the level of management and the potential growth then some of those stocks look quite cheap,” he said.

He highlighted other countries, including Turkey and Brazil, where Templeton had carried out profitable investments against a backdrop of political volatility.

Mr Mobius declined to go into detail about the amount of capital Templeton had invested in Pakistan, although he said it was no more than 1 per cent of the overall portfolio.

He said that while some other funds would undoubtedly be fleeing the country, he would remain invested. “We might even be in there buying,” he said.

The market fall was “par for the course” and might draw in more speculative investors including hedge funds.

“This is the kind of situation they love, provided there is enough of a downturn,” he said.