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Vietnam, Nigeria Are Among ‘Cheap’ Frontier Stocks, Mobius Says
By Shiyin Chen and Caleb Goddard

Jan. 7 (Bloomberg) -- Vietnam, Nigeria, Kazakhstan and Ukraine are among “particularly cheap” so-called frontier stock markets even as developing nations face a “correction” that may exceed 20 percent, investor Mark Mobius said.
“We’re finding some very interesting opportunities in those markets,” Mobius, who oversees $34 billion of developing- nation assets at Templeton Asset Management Ltd., said in a Bloomberg Television interview in Singapore. Still, liquidity may be an issue for some of the markets, he said.
Emerging markets are attracting more money to initial public offerings than developed nations for the first time, a warning sign that the record rally may turn into a 20 percent decline, Mobius said earlier this week. The MSCI Emerging Markets Index has gained 2.5 percent in the first four sessions of the year, extending last year’s 75 percent rally, the biggest since data began in 1988.
Mobius had predicted the gains as early as March 23, when he told Bloomberg Television that developing-nation equities are building the base for the next “bull-market” rally.
While the bull market will continue, it is ripe to be interrupted by a correction of 15 percent to 20 percent “or more,” possibly triggered by increased initial public offerings or as governments reduce money supply, Mobius said today.
Any correction would offer investors an opportunity to resume stocks purchases at attractive prices, Mobius said. Templeton took advantage of the credit crisis in Dubai to purchase shares at lower levels, he said.

Emaar

Mobius last month said Emaar Properties PJSC, which opened on Jan. 4 the world’s tallest tower, may lead a recovery among “bombed-out” United Arab Emirates developers after the Dubai debt crisis sent stock prices plunging. The shares have gained 58 percent from its Dec. 9 low.
Templeton is still finding stocks at “good valuations,” he said.
Companies in the MSCI Emerging Markets Index are trading near the highest levels relative to earnings since 2000. IPOs in developing economies raised $77 billion last year, exceeding industrialized nations by 160 percent, annual Bloomberg data starting in 2000 show.
Within the smallest developing markets, Sri Lanka’s stocks, last year’s best performer in Asia, have “gone up a little bit too high and we would like to see a correction from where we are now,” Mobius said. In Latin America, Templeton has become “cautious” on Argentina, while Venezuela and Ecuador are “not looking too good,” he said.
Among commodities, Mobius said he expects fuel prices to move up more “dramatically” because of the freezing weather across the Northern Hemisphere.
Crude oil fell as much as 1.1 percent to $82.30 a barrel in New York today, halting 10 days of gains.

--With assistance from Anand Menon in Singapore. Editors: Reinie Booysen, Linus Chua

To contact the reporter on this story: Shiyin Chen in Singapore at +65-6212-1170 or [email protected]

To contact the editor responsible for this story: Linus Chua at +65-6212-1530 or [email protected]