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hello and welcome to the show i am and today we have with us mark mobius founder obvious capital partners hello mark and welcome hi so what's your interpretation of the recent geopolitical situation and its impact on the global financial markets is the worst behind us or are we in for more pain ahead uh no i think what we're probably going to be looking at is a long drawn-out situation war in ukraine um and it doesn't look like putin will give up easily and of course the ukrainians are not going to give up easily and more importantly the europeans and the international community generally are in support of the ukrainians and they're going to try their best to support ukrainians which makes things much more difficult for the russians of course so i think we're looking at a drawn-out uh situation which makes uh europe somewhat dangerous let's put it that way and makes other countries around the world much more attractive so if if the european markets shiva which all markets across the globe do you think will catch cold well i think the other markets outside of europe will do well uh because they will be safe havens so the u.s equity market the brazilian market south africa china taiwan um all these countries that are not involved in this european situation will do quite well i think what about the u.s and indian markets indian market of course will do well because they are somewhat isolated from that situation as well and the u.s market should do well as well the only uh pickup and the problem facing markets around the world of course is the fear of higher interest rates but this is a very temporary fear because as we look at history you'll see that interest rates actually don't really have that much impact on stock markets they have a big impact on the fixed income market of course but not the equity markets indian markets mark they have they are grappling with the problems of their own uh on one hand they are looking at the u.s fed hiking rates we are looking at higher crude oil prices that can stop inflation fears then we have the impending state election outcome sometime next week so all of us all this doesn't doesn't get uh make indian markets a little more wobbly over the next uh few weeks or a few months well yeah in the short term you'll get some wobbliness you might say but in the long term the indian market should do very well because you've got very productive companies very profitable companies you've got a government that is intent on modernizing the economy making it more computer friendly so all of the technology that's being brought to bear uh is going to have an incredible positive impact on india going forward so for an indian investor will market diversification be a good idea right now or a bad idea should they be concentrating on the local equity markets it's very very important for everyone whoever they are whether you're sitting in the u.s india china south africa brazil wherever you are you have to be diversified away from your own market so for example for the indian uh investors you've got to be having of course a good part in india but you've got to be in other parts of the world countries in asia countries in latin america and of course the u.s market so diversification is very important and we've learned that as you can see with the situation in europe you know if you were sitting in europe with lots of stocks in germany uh you're not in very good shape so what's the most crowded trade according to you right now is it equities is it bonds is it real estate is it gold is it commodities well i always believe that people should have gold physical gold but the big winner is always equities the reason why is that equities adjust to inflation they adjust their prices in line with inflation so they're always ahead of the game so companies that are profitable that are able to raise prices in line with inflation should do very very well going forward what's your view on how central banks will respond to the recent developments do you see them printing more money going easy on the rate hikes over the next few months i think uh central banks realized they made a big mistake in lowering rates at such a low low level and now they're trying to catch up in the u.s as you know the inflation numbers show seven and a half percent and of course interest rates are way way below that so they're going to try and catch up of course the complications of the ukraine war may cause them to slow down their rate hikes but generally speaking they're now in a catch-up mode and you're going to see rates going higher so if the u.s central bank slows the rate hike process do you think that equity markets could probably bounce back from the current levels yes they will because as i mentioned if you look at the historical relationship between interest rates and stock market there really is no relationship uh high interest rates do not necessarily kill the stock market the equity market so there's no reason why uh we can't see the market bouncing back what are your views on the indian markets per se uh mark what kind of returns can one expect over the next one year or so well this year uh is going to be a mixed picture you're probably not going to see uh the incredible returns that we saw last year but i think they'll be reasonably good maybe five six percent like that but it's anyone's guess depending on what the macro situation develops globally but i think you know you're going to get returns but not as good as last year so within the equity universe in india do you think that the middle small cap companies could probably outperform this year or will they be underperformers well i always believe that the unnoticed uh medium and small caps tend to do better than the large caps because the large caps are very well researched everybody knows about them so they're sort of priced to protection let's put it that way whereas these small medium cap stocks are not very well researched and there are opportunities there you have to of course pick and choose uh you just can't you know say that all medium and small caps are good but you can get a lot of good opportunities in that space so rising oil prices are another worry for the indian markets uh which you know they can have an impact on inflation how do you see corporate earnings play out in this backdrop over the next few quarters are be looking at a pro you know uh phase wherein we could see probably um uh corporate earnings expectations come down uh yes uh of course you're going to see that you must remember we're coming from a year last year where the earnings pictures picture was very very bright now it's mixed and some companies are coming off this euphoria so you're probably going to see the more moderate numbers but again it depends on the company some companies are going to do very very well and of course others will not so it's a it's a individual company so at the aggregate level aggregate level can you put a number to it well the economy is going to be growing at six seven percent so you can expect a range of between five and ten percent uh for most of the companies what is what has been your strategy uh over the past few months uh have you been looking to you know increase exposure in india or in any other markets across the globe uh no we have not been moving in any direction either selling or buying if prices come off we do have cash reserves that we can use to buy more stocks particularly in india but in other parts of the world so which stocks and sectors in the indian context um you know probably would you look to invest in well as you know we're big on technology we like software companies but we also like medical field medical testing and some of the industrial companies are doing quite well india needs a lot of infrastructure lots of home building taking place so companies in that space are doing well as well foreign investors have been selling indian equity since october 2021.
do you see this trend reversing anytime soon and what is the key indicator that they'll be looking for over the next few months to start pumping money here again i think the key indicator will be actions uh taking place in the currency markets uh we have to look at the the indian rupee to see where it's behaving against the u.s dollar and other currencies if uh the current rate continues at these levels without any big change then we can be pretty much assured that we're back to normal and we're going to see good earnings numbers coming in primary markets have seen a lot of activity in the past one year and uh probably they're now gearing up for their aramco moment so to say in the initial public offer of the uh life insurance corporation uh do you think that there's enough appetite amongst investors foreign land retail that can absorb this kind of paper at this time well you know most of the large investors around the world are index investors they're not buying individual stocks they're buying indexes and they're buying etfs exchange traded funds so once the life insurance company enters the index these people will be forced to buy the company because in order to be in line with the index they must buy uh this large cap stock that's entering the index so in that sense yes the large institution will be buying so at a time when the foreigners were selling uh retail investors proved to be a backbone and held the markets uh at reasonably uh good levels so what's your what's your advice to them right now should they go all in or will the markets give them better opportunities to uh invest over the next few months i think in this environment it's a good idea to have maybe 10 15 in cash uh waiting for the opportunities because we may see more downsides nobody knows whether the market's going to jump up or do it down and if you uh see a market coming down uh to more attractive levels then you can use that cash to go in so it's always good to have this kind of opportunity awaiting for you so one last question mark what's your view on gold and oil well gold i'm as you know i've been saying for a long time everyone must have some gold in their portfolio particularly physical gold uh for emergencies just like now uh people sitting in ukraine who had gold are in pretty good shape they can have a currency and they can get out with gold and that's true people in russia i'm sure the people in russia who are holding rubles are very sad now because they've seen the ruble crash against the u.s dollar so gold is always good as a safety measure but then after gold as i mentioned equities are the place to be global equities diversified portfolio i was talking about the price levels as well about do you see them uh you know 10 higher 15 higher from here on uh as well as what's your view on crude oil in this background uh crude oil uh will probably uh continue at this level as you know it's already gone up quite a lot and i don't think you're going to see much appreciation i know a lot of people feel that with russia out of the picture uh oil prices will go through the roof i don't think so because you've got a number of alternative energy sources that you know and also you've got the u.s potentially be coming in as a another player and boosting production so i don't think this is going to be a real problem thanks a lot mark for your time today we hope to see you soon thank you bye-bye if you like this video share it and subscribe to business standard for more news views and insights log on to www.businesshyphenstandard.com do also follow us on youtube twitter facebook instagram telegram and linkedin
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