Legendary investor Mark Mobius says Chinese stocks are near their bottom and it's time to buy small and mid-sized names
- Investing legend Mark Mobius thinks Chinese stocks looks set to start recovering from a selloff.
- "We are probably reaching the bottom or near the bottom," he told the newspaper.
Investing powerhouse Mark Mobius says the selloff in Chinese stocks looks about finished and told the South China Morning Post it's time to look at companies that will benefit from regulatory policies from Beijing.
"Obviously, the Chinese government wants the market to perform better. We are probably reaching the bottom or near the bottom and the market is probably going to recover," Mobius said in an interview with the South China Morning Post published Tuesday.
The MSCI China Index, which covers about 85% of Chinese equities, slumped by 14% in the first three months of this year. Chinese stocks have slid in part by the Chinese government's crackdown on the technology sector that has hurt shares of heavyweights including Tencent and Alibaba Group. The regulatory crackdown led to the process of ride-hail app DiDi Global preparing to delist from the US stock market.
"These big boys were basically dominating so many fields," Mobius told the newspaper. "It's a good idea to look at the medium and small companies, because they are going to be benefiting from government policies to create a more level playing field."
Mobius, who was behind the world's first emerging-markets fund at Franklin Templeton Investments, said it's best to steer clear of index funds as indexes tracked are dominated by big tech companies that may be subject to more regulatory action.
He said shares of individual small and mid-sized companies with low debt and solid earnings are better bets as they will benefit from new regulatory policies from Beijing. The newspaper noted China's securities regulator is working on widening investors' access to the stock market and on resolving a dispute with the US over the financial auditing of Chinese companies listed in the US.