Brazil’s economy is “more sustainable” than China’s because its exports of raw materials from metals to crops make it more resilient, investor Mark Mobius said.
The valuation of the benchmark Bovespa stock index “is not excessive,” Mobius, chairman of Templeton Asset Management Ltd., told investors in Bangkok today. The gauge trades at 13.2 times estimated earnings, compared with 17.9 for the Shanghai Composite Index, according to data compiled by Bloomberg.
“Brazil’s economy is more sustainable because they don’t have to import anything. China has to import oil, iron ore and foods,” said Mobius, who oversees $34 billion of developing- nation assets at Templeton Asset. “Brazil is in a situation where it has tremendous resources. Not only mineral resources, but agricultural resources.”
Global equities tumbled last week after higher-than- expected economic growth in China fueled concern the fastest- growing major economy will raise borrowing costs to keep its economy from overheating. Brazil’s index, which tumbled the most in three months on Jan. 22, remains 72 percent higher over the past year, as record-low interest rates and government stimulus plans helped pull the economy from a recession.
The Bovespa stock index surged 83 percent last year, the most since 2003. China’s Shanghai Composite climbed 80 percent.
The Bovespa index’s price-earnings multiple is the lowest among the key gauges in Latin America, according to data compiled by Bloomberg.
Mobius was introducing a fund dominated by Brazilian stocks to Thai investors. Brazil’s equities make up of more than 60 percent of the Templeton Latin American Fund to be marketed to Thai retail investors by Ayudhya Fund Management Co.
The fund has about $3.4 billion of assets, according to a presentation distributed to potential investors today. Its biggest holdings include Petroleo Brasileiro SA, Brazil’s state- controlled oil company, Itausa-Investimentos Itau SA, the holding company of the country’s largest non-government bank, and Bradespar SA.
Ayudhya Fund, a Thai asset management company controlled by General Electric Co., aims to raise as much as 1 billion baht ($30.3 million) from Thai retail investors that will be invested in Mobius’s Templeton Latin American fund.
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