US slowdown won't last; bargains abound: Mobius

The US slowdown may be shorter than expected and private equity investors should start searching for bargains after valuations tumbled this year, said Mark Mobius, executive chairman of Templeton Asset Management.

“I just don’t see a long, protracted recession,” Mobius, who manages about $40 billion in emerging market stocks, told the Super Return Asia conference in Hong Kong on Tuesday. “There is an opportunity to buy low right now and sell high in the next cycle.”

Mobius said private equity investors with a five-year investment horizon should watch out for bargains, even in export-oriented industries, because world trade is still increasing. The economies of emerging countries including China, India and Russia should withstand the financial-market turmoil because they have resources to boost domestic spending, he said.

Private-equity firms raised a record $324.4 billion in the first half as investments in funds that buy distressed assets increased, according to a report from London-based Preqin. Announced leveraged buyouts dropped 73 per cent in period to $143.1 billion though, according to data compiled by Bloomberg, after investors and banks cut off financing as credit market seized up.

Global stock markets whipsawed last week after Lehman Brothers Holdings filed for bankruptcy, Merrill Lynch & Co sold itself to Bank of America and regulators pumped $85 billion into American International Group to bail out the world’s biggest insurer. The MSCI World index slumped more than 7 per cent by mid-week before rallying after central banks pumped money into the financial system.

US regulators and lawmakers are working on a broader rescue that could cost more than $700 billion.