Templeton’s Mark Mobius said the worst of the current downturn in China’s stock market is almost over and the economy remains an “important global market.”
Chinese shares have retreated in the past three weeks, losing more than 30% at some point from its June 12 peak. The Chinese government has launched a string of economic and market-boosting measures including a rate cut, liquidity support from the central bank, and easing stock investment and margin rules just to restore confidence and stabililize the market.
In a July 9 blog post published on Templeton’s website, Mobius said while they are already investing in China, their strategy is to wait until such time that prices are attractive enough.
Mobius, executive chairman of the Templeton Emerging Markets Group, wrote:
“I think we are probably getting close to a capitulation point in China. We should see at least a short-term bounce soon, and many investors who didn’t get out before may use that move to do so. Then, we would expect to likely see sideways action until the market can hopefully recover, provided valuations are good.
In our view, the China story is still intact. China is still growing at a good pace, and we believe it’s an important global market that we want to have exposure to for the long term. We know that China has slowed from the 10%+ growth rates it has had in the past. It’s still a very big, fast-growing economy, and we believe in the merits of investing in equities in China. If we can do so at a lower price, so much the better.”
Mobius added that while these types of bear markets tend to not last long, their recovery tends to be “bigger in percentage points.”
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