Mark Mobius: the bold, the bald and the lucky

Many observers believe the developing world is in crisis. But for shiny-scalped Mark Mobius, political upheavals and associated market tremors form part of the rough and tumble of investing in emerging economies.

In fact, the contrarian-minded executive chairman of the Templeton Emerging Markets Group, which oversees $47bn, sees positive factors in all fear-fuelled regions.

While Turkish authorities have blamed foreign investors for manipulating the Istanbul exchange, amid mass arrests of journalists and the banning of Twitter, he plans to keep buying into the country’s story. The 77-year-old believes in Turkish “entrepreneurial abilities”, despite reservations about restricted information flows.

“A growing middle class is demanding better government with less corruption and waste,” he says about social unrest in Brazil, which threatens to undermine the summer showcase World Cup football tournament. “The good news is the people are making their voices heard.”

He even sees a positive story along one of Europe’s oldest faultlines. “As an investor, I believe Ukraine’s strategic importance to both Russia and the EU could help ensure its survival, its solvency and its potential long-term success.” Individual Ukrainian companies, particularly agricultural stocks, are said to be catching his eye. Franklin Templeton made a $4.1bn investment in Ukrainian bonds via fellow portfolio manager Michael Hasenstab, who thinks the country’s interim government has done what he calls an “exceptional job”.

Going against the grain is second nature for Mr Mobius. “You have to be on the ground, and when prices are low and a place is unpopular, it often presents an opportunity,” he says.

His greatest fear is that the current cycle of popular uprisings, which help rotate politically connected business elites, may be replaced by a slide back to Communist ideology, which shaped his family’s history.

Born in New York to a Puerto Rican mother and German father, he vividly recalls crossing Berlin’s Checkpoint Charlie during a Cold War visit to relatives. “I travelled to visit my niece in east Germany, coming in on a practically empty train to a deserted Leipzig station in the dead of night, with guards searching for smuggled goods. I was instructed by family not to speak to the children as they would be questioned at school about having a visitor from the west.”

A return to this depressing “Socialist model” is the biggest threat to global markets, Mr Mobius believes. He is speaking from Franklin Templeton’s Singapore office in Suntec City, next to the huge Fountain of Wealth, designed by feng shui experts to represent inflowing riches. He is quick to praise this adopted country for its combination of private and public sector innovations.

Many developing nations were just beginning to emerge from centralised state-planned regimes when Mr Mobius joined Templeton in 1987, after cutting his teeth managing money in Taiwan. Here he was a “prickly character generating pedestrian performance”, according to a contemporary. These days “his record looks better, because he has been around the longest”, says the source.

“We started with $100m [at Templeton] and it was difficult to invest that money across just five emerging markets: Mexico, Hong Kong, the Philippines, Malaysia and Singapore,” recalls Mr Mobius, remembering an age before massive fund flows introduced huge volatility. “But a new reality was taking hold, with poor countries beginning to welcome foreign capital and encourage privatisation. We were there for the start of those developments.”

After Templeton ran a series of striking advertisements in the Hong Kong press featuring the back of the then-unknown money manager’s bald pate, he became something of a cult figure in Asia.

To market his fund, Mr Mobius took to the skies. He criss-crossed the continent in a private jet, sustained by Chinese colleagues with instant noodles, enjoying an active social life en route.

In addition to Asian retail money, he tempted European institutions to invest in not just Hong Kong, but the even more exotic nearby Chinese special economic zone of Shenzhen. It was then a small provincial town, far removed from today’s 10.5m strong city. From 1992-96, when he was pushing investment in Hong Kong, the Hang Seng index averaged a 26.5 per cent annual return, not including dividends.

The highly superstitious Cantonese in particular piled into the talismanic manager’s funds. “They generally believe a bald man brings them good luck,” he says, unfazed by adulation and comparisons with the swashbuckling film stars Telly Savalas and Yul Brynner. “I did not really identify with any of the characters they played, but Yul Brynner was a pretty good actor,” says a smiling Mr Mobius.

His script seemed to write itself until the Asian crisis of 1997, which led to significant portfolio losses. The worst stemmed from Indonesia’s $13bn Asia Pulp & Paper default of 2001. “We lost a little on the equity side and a couple hundred million in fixed income,” he remembers, almost wincing at the memory.

He remains wary of corruption in Indonesia, where family-dominated companies loom large on the corporate landscape and other investors, including UK financier Nat Rothschild, nearly came to a sticky end. “If the guy who founded a company is still leading it, then that is great. But if his son is leading it, it could be time to forget it and get out.”

Kicking tyres across the developing world has also led to spectacular successes. The restructuring of China High Speed Transmission, the manufacturer of wind turbine components, was “a real winner” for Templeton, returning 17 times its original investment. Currently he prefers to play China through Taipei. After a recent visit, he praises the “incredible work ethic, flexibility and creativity of Taiwan business people”. In addition to integrated circuit technology leaders such as TSMC, “Taiwan companies dominate the instant noodle and juice-drink business in China”, he says.

As well as looking for efficiency in his investment targets, Mr Mobius has eliminated his lengthy runs along Asia’s developing urban waterfronts. He stays trim enough to fit into his immaculately pressed tropical suits through daily gym visits, provided they have his preferred TRX training equipment. He saves more time by scrubbing shirt collars while showering, leaving them to dry overnight on heated towel rails.

“In the short term we may have underperformance, but we are always focused on the long term,” he says, admitting his admiration for competitors Aberdeen and Fidelity. “Emerging markets are growing five times faster than developed countries, have much more foreign reserves and debt to gross domestic product is much lower. Put all this together, and money will always eventually find its way back into emerging markets.”

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Curriculum vitae

Mark Mobius

Born 1936

Education

Bachelor’s and master’s from Boston University (social psychology, art and journalism)

PhD in economics and political science, MIT

Career

1980-86 Portfolio manager and director of research, Vickers Da Costa. Opened the company’s Taiwan liaison office in 1983

1986-87 Portfolio manager and president, International Investment Trust Company, Taiwan

1987 Joins Templeton and launches Emerging Markets fund

1992 Franklin Resoures acquires Templeton

2005 Launches group’s first Bric fund

2008 Launches group’s first frontier markets fund

2010 Executive chairman, Templeton emerging markets group

2012 Launches first Templeton Africa fund

2013 Launches Luxembourg-registered Sicav for sharia investors

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Franklin Templeton

Founded 1947

Assets under management $886.9bn, as of March 31 2014

Headquarters San Mateo, California

Employees More than 9,000

Ownership structure Publicly traded