Mark Mobius: China's regulatory crackdown is creating investment opportunities

Published Fri, Aug 27 20219:11 AM EDTUpdated Sun, Aug 29 20219:48 PM EDT

The regulatory crackdown in China has presented investors with the opportunity to buy some big-name stocks, veteran investor Mark Mobius told CNBC Friday. Mobius, founding partner at Mobius Capital Partners, told CNBC's " Street Signs Europe " that he believed the regulatory clampdown in China was good news because it would improve the governance of companies in the long term. Authorities in China have recently sought to increase regulation across sectors such as technology, education and food delivery and the move has hit some stocks hard. Mobius, who is known for his views on emerging and frontier markets, warned that, on the one hand, investors ought to be "very careful" as this increased regulation could be causing large, state-owned funds to reconsider whether they want to continue to investing in large Chinese companies such as technology giant Alibaba . And given that these types of funds are major investors in such large companies, the company's share price could fall if they reduce their holdings. "But, the good news is that, people who are willing to dig a little bit in these markets will find lots of gems among the medium-sized companies and the companies that [have] not been hurt by the regulatory crackdown," Mobius said. "With a company like Alibaba down by 30%, and many of these other companies equally down, there may be now opportunities to pick up some of those stocks, because the reaction of the market maybe has been something excessive." Stocks like Alibaba, as well as other Chinese technology giants such as Tencent and Baidu, fell sharply earlier this month but have recovered slightly this week. "There may be some good pickings among the large stocks that have gone down a lot," Mobius added. 'Very bullish on India' On India, meanwhile, Mobius said he was "very bullish" because of "continued high growth." The IMF expects the country's gross domestic product to grow by 9.5% in 2021. The investor also highlighted the benefits of India's privatization program, with the government selling its stakes in various state-owned businesses , like airline Air India. The sale of these state-owned assets is estimated to be worth $81 billion, Mobius said, which will not only boost government finances but also make India's stock market more liquid. It will "improve the way these state-owned companies are being managed because they'll have to adhere to better corporate governance," Mobius said, adding that his firm was focused on India's small and medium-sized companies. Mobius told CNBC back in May that he liked India's software companies, health care stocks, as well as firms providing equipment and materials to infrastructure projects.

A man watches electrical screen showing stock price index on March 8, 2021 in Shanghai, China.

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The regulatory crackdown in China has presented investors with the opportunity to buy some big-name stocks, veteran investor Mark Mobius told CNBC Friday.