Mark Mobius Sticks With South Africa Bet, Despite Turmoil
Associate Editor, CNBC
Investors should not be spooked by recent events in the South African mining industry, as the market offers a number of strong investment opportunities, Mark Mobius, executive chairman at Templeton Emerging Markets Group, told CNBC Monday.
"The consumer facing stocks are the place you would want to be but you don't have to dump mining stocks just yet, but you do need to be careful there, " Mobius said. "The [South Africa] market is very liquid — unlike much of Africa — and is a great entry point to the rest of Africa because it's so diverse."
He added that an improvement in the global economy could create ripple effects for the South African commodity market, as the Chinese continue to purchase commodities, albeit at a slower pace.
"You have to be cautious on some of the commodities but oil, nickel, palladium and platinum as well as copper are likely to do well, as construction in emerging markets continues, " he said.
Striking miners in Africa's largest and most developed economy have roiled the country's mining industry.
A fatal standoff at the Lonmin platinum mine between miners and South African police also resulted in a number of deaths in August.
The unrest has impacted the broader economy, given the prominence of the mining sector, and the country's sovereign rating was downgraded last week by Standard & Poor's to BBB with a negative outlook.
Mobius also addressed recent criticism of BRIC countries — Brazil, Russia, India, and China — because of the underperformance of their markets.
Mobius said BRICs — the term coined by Jim O'Neill of Goldman Sachs — were very separate entities with distinct destinies.
"The BRIC concept was very clever and helped customers who buy funds a very good way to conceptualize emerging markets, but when you're investing you have to look at these individually, " he said.
Admitting BRICs had been a phenomenally successful acronym Mobius said it was best to avoid most other acronyms in investment as they were too complex and "not worth it." "So far this year emerging markets have underperformed but now I think they will outperform the U.S., " he added.
—By CNBC's Shai Ahmed; Follow Her on Twitter @shaicnbc