China’s bid for greater influence in global financial markets will benefit from Britain’s decision to leave the European Union, fund manager Mark Mobius said.
While the outcome of the referendum in the United Kingdom last week sent shock waves across global financial markets, Asia will be seen as relatively more desirable because it’s largely isolated from Europe’s turmoil, Mobius, executive chairman of Templeton Emerging Markets Group, told Bloomberg in an interview in London on Wednesday.
“We’ll find people raising money in China rather than in London or New York” five years from now, Mobius said. “If the center of gravity moves, it will have tremendous implications for the banking community, investors. Brexit will accelerate that.”
China, which counts the United States, Japan and South Korea among its biggest trading partners rather than European nations, is on course for greater internationalization of the renminbi.
The currency is expected to be included in the International Monetary Fund’s Special Drawing Rights in October, joining the dollar, euro, yen and pound, while the government is expected to eventually unify its local and offshore yuan rates.
China has the largest weighting in the 1.5 billion pound (US$2 billion) Templeton Emerging Markets Investment Trust, which has outperformed more than 80 percent of peers so far this year, according to data compiled by Bloomberg.
“All of this turmoil in Europe and the UK could prompt people to say, ‘Look, I’m going to diversify away from Europe and the UK,’” Mobius said.
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