Fund manager Mark Mobius said the bull market in Chinese stocks is just getting started and he’s using the biggest price swings in five years to boost holdings.
“We are buying more in China because we think this is the beginning of a longer-term bull run,” Mobius, who oversees about US$40 billion as executive chairman of Templeton Emerging Markets Group, told Bloomberg News in an interview.
Mobius is increasing his bets on China after correctly predicting four months ago that the nation’s stock rally had further to run amid low valuations and government efforts to open up state-dominated industries.
The Shanghai Composite Index jumped 51 percent from a four-year low in June 2013, but that rally is still less than half the average 122 percent gain during 26 bull markets since 1990, Bloomberg said.
China’s stock market recovery has accelerated during the past month as the central bank unexpectedly cut interest rates and mainland investors opened new stock accounts at the fastest pace in five year, the report said.
While the Shanghai index posted its biggest one-day tumble since 2009 on Tuesday, Mobius said increased volatility is creating opportunities to buy mispriced shares.
He said he’s been buying Chinese stocks “across the board”, including oil-related companies, on expectations that crude prices will recover from five-year lows. PetroChina, the nation’s biggest energy company, has climbed 21 percent in Shanghai trading during the past month.
While Chinese shares will experience “corrections along the way”, they won’t enter a bear market any time soon, said Mobius, whose US$13 billion Templeton Asian Growth Fund has returned about 8.5 percent this year.
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