Mobius: Great Time to Get into China Banks

The $245 billion global credit market catastrophe is receding, says international fund guru Mark Mobius, fund manager of Templeton Asset Management.

In fact, now might be a great time for investors to buy international banking stocks, Mobius said in a television interview.

Mobius directs $47 billion in emerging market equities investments. He has been purchasing Bank of China, Industrial & Commercial Bank of China, and other banks in Southeast Asia.

"We’ve been adding in the banking sector generally,” says Mobius. "Prices have come down to more reasonable levels.”

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Shockingly, this advice comes despite the fact that the Shanghai Composite has fallen by close to 50 percent since October.

Among the stocks that have caught the attention of Mobius. So far this year, Bank of China has fallen 22 percent on the Hong Kong stock exchange, while Industrial and Commercial Bank has dropped 21 percent.

Some do not share Mobius’ optimism, overall, about the end of the credit crunch, but grant that he may be right on specific countries and leading companies in those countries.

"The economic viewpoint is not so clear,” Dr. Robert Rainish, a professor of finance at the University of New Haven, tells MoneyNews. "The worst of the general economy has not been reached.”

Rainish predicts that the global economy will be growing by the third quarter of this year, and that corporate profits will be rising from current lows. "Recovery will take much longer than normal,” says Rainish.

Others fear specialty sectors of the global economy, like derivatives, could lead to more shoes dropping ahead.

"No one knows the extent of the losses hidden in the tranches and derivatives that have not yet been written down,” Paul Gellert, president of Gelco, a New York City commercial financing firm, tells MoneyNews.

"The big issue is when perception becomes reality. Investors hold back because they are afraid that what they are buying is at 94 percent of value when it should be at 87 percent of value.

"They are afraid that instead of taking a haircut, they will be scalped,” he says.

Some more time needs to pass before U.S. investors and consumers change their pessimistic attitudes about the economy.

"The impending recession, and the rising cost of living, especially for fuel and food, is leading to increasing pessimism among the public, making many reluctant to take on new financial obligations,” says Warren Bland, author of "Retire in Style: 60 Outstanding Places Across the USA and Canada.”

But pessimism about the U.S. economy — colored by the decrepit housing market — may not dissuade many from listening to Mobius, who has a more global vision: His $376 million emerging market fund has gained 15 percent in the last 12 months.

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