Mobius: 'record inflows' into GEMs in 2010

Templeton's Mark Mobius believes this year will see record inflows into emerging market funds.

The emerging markets guru says the combination of low interest rates in developed markets and the search for higher returns have helped channel $73bn into emerging market portfolios in the first 10 months of 2010, on track to exceed 2009's total of $83bn.

Mobius, executive chairman of the Templeton Emerging Markets Group, adds fund raising by companies in emerging markets through IPOs and secondary issues was at a historical high this year.

"Emerging market companies raised $406bn in initial public offerings and secondary equity issues in the first 11 months of the year, significantly higher than both the $236bn raised in 2009 and the previous record of $388bn in 2007," Mobius says.

Although emerging stock markets have lagged the returns seen in 2009, with the MSCI Emerging Markets index up just 11% in US dollar terms in the first 11 months of this year compared to a rise of nearly 80% in 2009, Mobius says certain countries have seen strong performance.

"Argentina, although a somewhat small and restricted market, was one of the top performers, returning close to 70% in US dollar terms for the year to end November, as investors anticipated long-overdue market reforms after the death of former President Nestor Kirchner," Mobius says.

"Another strong performer for the 11-month period was Thailand, with a 51% return in US dollar terms, as investors focused on the strong fundamentals of the market and chose to overlook the political turmoil earlier in the year.

"Other strong performers included Chile, Colombia and Peru in Latin America, Indonesia and Malaysia in Asia as well as Turkey in Europe.

I believe many of these trends are likely to continue."