As the world struggles with economic recovery, whats happening with emerging stock markets?
Mark Mobius: The emerging markets were hit in 2008 and 2009 by the subprime crisis, then we had this incredible turnaround with markets recovering by an average of 60% in one year, and some markets went up by 100%. Also, this year, because of this big run up in price you’ve seen initial public offerings increase dramatically. Last year in emerging markets alone we saw about $95 billion raised through IPOs. This year it’s about $144 billion with another $30 billion waiting in the wings, so that puts some downward pressure on the market. Are their economies in good shape? Though conditions differ from region to region, on balance the answer is yes. For example, in holdings of foreign reserves, emerging markets have surpassed developed countries. Actually, that began in 2005 and the spread in foreign reserve holdings has just widened. Also, the Debt-to-GDP ratio for emerging markets is much less than that of developed countries. (See the best business deals of 2009.) Where do things look
