Veteran investor Mark Mobius, chairman of the Mobius Emerging Opportunities Fund, has identified a lucrative investment opportunity for the coming year: U.S. technology companies with significant exposure to emerging markets. In a recent CNBC interview, Mobius underscored the immense growth potential of these firms, attributing it to their ability to leverage technology for enhanced productivity in rapidly developing economies.
Mobius specifically highlighted U.S.-based companies operating within and exporting to major markets such as China and India. He stated, “I focus on those companies that are global in their scope, producing and exporting and selling in these countries, because that’s where the growth will be.” This strategic focus reflects his long-held belief in the economic dynamism of emerging markets and their increasing importance in the global economy.
Furthermore, Mobius emphasized the importance of companies involved in “accelerated information” technologies, specifically citing chip manufacturers. The remarkable surge in information processing capabilities is driving considerable growth in this sector, particularly in semiconductor-producing emerging markets. Taiwan, a leader in advanced chip manufacturing, and Southeast Asian nations, notably Malaysia, are attracting substantial foreign investment due to their increased focus on chip production, underscoring the region’s rising technological prowess.
This bullish outlook on tech investments comes amidst ongoing concerns about a potential tech bubble, fueled by the high valuations of major tech giants like Alphabet (Google), Amazon, and Nvidia. Despite these concerns, Mobius remains optimistic, arguing that the impressive growth rates of these companies justify their current valuations. He expects continued strong performance from the so-called “Magnificent Seven” tech giants, suggesting that the market’s current assessment of their value is indeed supported by their underlying performance.
Mobius’s perspective is particularly insightful given his long-standing advocacy for emerging market investments, especially in Asia. In July 2023, he publicly stated that he held no investments in the U.S. market, instead focusing entirely on international and emerging markets. His current recommendation aligns perfectly with this established investment philosophy.
However, Mobius acknowledges potential risks. He has voiced concerns about recent volatility in the U.S. markets, pointing to a significant decline in the U.S. M2 money supply as a potential cause for concern. This reduction in money supply could impact discretionary spending, a major driver of economic growth in the United States. Furthermore, the meteoric rise of Nvidia’s stock price, driven by the soaring demand for its AI chips, has also raised red flags. This concentration of investment in a single company presents potential risks to investors if the stock were to experience a downturn. The significant holdings of Nvidia shares by major asset managers increase this risk, highlighting the need for diversified investment strategies.
In conclusion, Mark Mobius’s strategy of focusing on U.S. tech companies deeply entwined with the growth of emerging markets presents a compelling investment thesis for 2024. While acknowledging potential risks, his long-term perspective and understanding of global economic dynamics provide valuable insights for investors seeking exposure to this promising sector.
