Mobius: Not time for China panic yet

3 August 2012 | By Gary Jackson

The much-publicised slowdown in the Chinese economy should not cause investors to “push the panic button” just yet, emerging markets fund manager Mark Mobius argues.

In his latest blog post, Mobius says the slowing expansion should be expected in an economy that is undertaking significant changes to move towards a more sustainable economic model.

“Slowing growth is a natural part of the evolution of an emerging economy, particularly one as large as China, the second-largest economy in the world,” he says.

“China is also undergoing structural changes that often come with the side-effect of a few growing pains.”

Mobius, manager of the £1.9bn Templeton Emerging Markets investment trust, notes that China is building a more consumption-focused economic model and is gradually loosening controls on its economy, which will pay off in the long term.

The manager points out that the Chinese authorities have a number of policy levers to help support the economy. These include the ability to lower interest rates further, ease limits on bank lending and channel investment in infrastructure projects.

In addition, Mobius sees the structural changes as creating investment opportunities, even as headline growth rates slow.

“Consumers and commodities are particular areas of interest, because we believe a transition to a more consumption-based economy should help support these sectors,” he writes.

“I have every reason to believe this transition should be successful and still believe China could continue powering ahead.”

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