Mobius positive on Egypt despite turmoil

Templeton’s emerging markets expert Mark Mobius says he is still 'very positive' about Egypt’s investment prospects, believing political turmoil will spur long-term reform.

Mobius' comments come as Egyptian president Hosni Mubarak rejects calls for his immediate resignation, fuelling further concern the political and civil unrest will spread across the region, Bloomberg reports.

However, Mobius says Egypt is on the path to reform. "This is one great thing that is happening globally, not only in Egypt."

He adds the speed of digital telecommunications coupled with civil discontent is further fuelling demand for change in Egypt.

Investors have pulled money from emerging markets and have invested in US and European stocks this year, although the growth prospects offered by developing economies will attract investors back, Mobius says.

The manager believes demographic trends, along with demand for raw materials such as grains and crude oil, will fuel the performance of equities in emerging market economies, Reuters reports.

He says: "We can summarize fundamentals for emerging markets stocks in just one word: growth."

However, he warns the deluge of cheap money from central banks around the world is a "double-edged sword" that could spur food inflation globally.This could create severe problems for markets and potentially lead to situations similar to those in Egypt.