By Kevin Lim
SINGAPORE, Feb 28 (Reuters) - Templeton Asset Management
favours Asian energy stocks and has placed a big bet on fast
growing but politically volatile Pakistan, the firm's top
emerging markets fund manager, Mark Mobius, said on Thursday.
Templeton expects oil prices <CLc1> to stay around $100 a
barrel, helped by soaring demand in China and India, which will
shore up earnings at companies such as Petrochina <0857.HK> and
India's Oil & Natural Gas Corp (ONGC) <ONGC.BO>.
"The housing crisis is hitting the U.S. market. There is an
impact but what we found in the past is that oil consumption does
not go down dramatically," Mobius said in a telephone interview
with Reuters.
"The swing factor (for oil) is what is happening in China and
India," said Mobius, who manages a total of $40 billion in
emerging market assets, about half of which is invested in Asia.
Mobius' Templeton Asian Growth Fund was 36 percent invested
in energy at end-January, and its top holdings included
Petrochina, China Petroleum & Chemicals (Sinopec) <600028.SS>,
Korea's SK Energy <096770.KS> and India's ONGC.
The $7.7 billion fund was 106 percent invested in equities as
Templeton borrowed to meet redemptions last month rather than
reduce its shareholdings, at a time of sliding global stock
markets as investors worried about a spreading credit squeeze.
"The values were there and we thought there would be a
recovery... It's advantageous for existing shareholders as we are
not forced to sell down at unreasonable prices," he said.
Asian stocks excluding Japan <.MIAPJ0000PUS> fell close to 20
percent at one stage in January but are now down about 7 percent
for the year.
Templeton said its funds can borrow up to 10 percent of their
asset value to meet short-term redemptions, giving managers
greater flexibility in managing their portfolio when markets are
volatile.
The Asian Growth Fund returned 36.7 percent in the past 12
months, beating a 22.4 percent rise in its benchmark, the firm
said.
PAKISTAN'S PULL
In Pakistan, a market shunned by most institutional investors
but which accounted for 5.3 percent of Templeton's Asian Growth
Fund's portfolio, Mobius said the country's stocks were
attractively priced at forward price-earnings ratios of less than
10.
Pakistan's stock market <.KSE> is Asia's top performer this
year, up almost 10 percent on top of a 40 percent rise last year.
Economic growth has averaged about 6 percent in the last five
years, but the South Asian country has been plagued by political
instability and militant attacks.
A Templeton spokesman said the firm's Pakistani investments
included CB Bank, Oil & Gas Development Co <OGDC.KA>, Faysal Bank
<FYBL.KA> and Pakistan Telecommunication <PTCA.KA>.
"It's working out for us well," Mobius said, noting that
recent elections had replaced an unpopular military-backed
government with a civilian government that was likely to retain
the previous administration's pro-private enterprise policies.
Templeton believed there was little chance of a recession in
Asia, citing the strength of China's economy. The Federal
Reserve's massive injection of funds will help alleviate the
downturn in the U.S. economy, Mobius added.
He predicted a sliding U.S. dollar will stabilise against
most Asian currencies, which he said will help exporters in
countries such as South Korea and Taiwan.
However he expects China's yuan <CNY=> to gain around 10
percent this year and for India's rupee <IDR=IN> to rise about 8
percent. The yuan is up 2.2 percent so far in 2008 but the rupee
is down 0.8 percent [EMRG/FRX].
"We don't see any huge problem in terms of a big bear market
continuing in Asia," Mobius said. "We think there will be a
recovery."
(Editing by Neil Chatterjee and Lincoln Feast)
(([email protected]; +65 6403 5663; Reuters Messaging:
[email protected]))
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Keywords: TEMPLETON EMERGING ASIA/
Keywords: TEMPLETON EMERGING ASIA/