“Our work is never done. Companies lie. They lie straight to your face. You need to look at the numbers and read between the lines, and talk to competitors. You need to know who owns what, and who’s doing what with which people. “Sometimes, in the family-owned companies, the slick, well-groomed son might be up the front but it’s really the father that’s running the show.”
Developing some knowledge of the geopoliticial and ethnic tensions of regions and how these histories influence business is also a valuable input into analyses of the long-term viability of companies and economies. “You need to understand where they are now in terms of where they were.” These interests, and the social circles that Mobius inhabits, have opened another occupational opportunity. More than a year ago, after writing a travel story for Prestige magazine, he was asked at a party by an executive at British social magazine Tatler to pen a monthly column for its travel instalment.
In his book, Passport to Profits, Mobius presents a candid insight into his professional motivations: “sometimes I wonder if I travel to run money, or run money to travel”.
Money (or your life) on the frontier
The adoption of market economy models and privatisation of state-owned enterprises has put the next emerging economies, the frontier markets, within Templeton’s scope. The economies of countries spanning Asia, Latin America, southern Europe and the Middle East and North Africa have the potential to grow fast, but with severe volatility. They resemble today’s emerging markets 20 years ago, Mobius says.
He forecasts the markets of Qatar, the United Arab Emirates (UAE) and Panama to grow 11.8 per cent, 8.4 per cent and 7.0 per cent respectively in 2008. In contrast, the US, UK and Japan are expected to expand by 1.5 per cent, 1.7 per cent and 1.3 per cent respectively. As the numbers show, this growth is not fully bound to the performance of mature markets. The correlation coefficient between the Standard & Poor’s Frontier Markets Index in comparison to the three major MSCI Indices, the MSCI World, MSCI Europe and MSCI Emerging Markets, stands at 0.6. It follows that they have not been affected by the credit troubles to the extent that the developed world has.
In the one-year period ended June 2008, the S&P/IFCG Bangladesh, Cote d’Ivoire and Mauritius indices returned about 60 per cent in US dollar terms, while the S&P/IFCG Lebanon index returned more than 100 per cent, Mobius says. Other markets such as Trinidad and Tobago, Tunisia, Kenya and the Slovak Republic all returned nearly 30 per cent. Meanwhile, the MSCI World index has declined by 10 per cent in US dollar terms.