Buy Mexican stocks in wake of Trump election, says Templeton guru Mark Mobius

Mobius: Mexican stocks look like a good bet

After Donald Trump's U.S. presidential win, global investing guru Mark Mobius told CNBC on Friday that he likes Mexican stocks.

"In the case of Mexico, it looks like a great opportunity to buy stocks. The currency is down dramatically. Chances are it'll probably stabilize at this level or go a little weaker," said the Templeton Emerging Markets Group executive chairman. "We're taking advantage of the volatility."

The Mexican stock market has dropped about 6 percent since Trump's victory, while the peso has tanked 13 percent against the dollar over the same period.

Trump's calls during the campaign for building a wall along the southern border to prevent illegal immigration have sparked concerns about what kind of relationship the U.S. and Mexico would have under the new Republican administration.

While optimism in the U.S. over Trump's prospects to boost the American economy has pushed the Dow Jones industrial average up nearly 3 percent and to a new high after Tuesday's election, emerging markets have gotten hammered.

The MSCI Emerging Markets ETF has lost nearly 8 percent since Trump was declared the winner over Democratic nominee Hillary Clinton early Wednesday morning.

Mobius: Big changes for emerging markets post Trump victory

Mobius expects emerging market volatility to continue and intensify, until it becomes clear which of Trump's policy ideas from the campaign will be implemented when he gets to the White House.

"As the [Trump] administration gets its feet on the ground and begins to realize what's happening in the world and become more realistic, these markets will recover," he predicted.

But Mobius does expect Trump to follow through on his campaign promises to seek better trade deals, perhaps cutting bilateral trade agreements and scrapping the multilateral ones of the past.

Concerning China, Mobius said Trump may want to reconsider his tough talk. "If he plays hardball in the sense of imposing big tariffs on China, of course they will respond equally, and that would not be good for either policy."

Trump, during the campaign, also repeatedly accused China of being a currency manipulator.

But Mobius said that's not the case. "The Chinese are not deliberately in charge of what's happening to the currency as they loosen up the reins of currency restrictions in their country."

He believes that the Trump administration will come to realize that fact, and may end up wanting the Chinese to "manipulate even more" to boost the currency against dollar to make U.S. goods sold there more competitive.