The Three Best Places To Invest Now, According to Emerging Markets Guru Mark Mobius

Emerging markets are gaining popularity again, and Goldman Sachs is now forecasting that by the end of the decade, stocks from these regions will make up a bigger share of the total global market than US stocks. That’s big news for investors hunting for long-term growth. And if you want a piece of this pie, there’s no one better to tell you about it all than the pioneer in emerging markets investing himself: Mark Mobius. The cofounder of Mobius Capital Partners recently shared his top ideas with Bloomberg, so I’ve distilled them for you, along with how you can invest like he does…

Idea #1: India, for being big and booming.

It’s easy to see why India is one of Mobius’s favorite places to invest. It’s got a massive populace that’s both young and growing, which gives it a sturdy consumer base and a vigorous workforce. Compare that to China, which is facing the economic threats that come from an aging population. This year, India’s economic growth is expected to top 7% – one of the highest in the world – and in Mobius’s view, any reasonably good India-based company should be able to double that pace. He expects companies there to see no less than 14% earnings per share (EPS) growth, and a return of capital of 20% or more – a feat that’d be hard to achieve in any developed market.

India has the lowest urbanization rate of all of the biggest emerging market (EM) countries. And that gives it a lot of runway for growth. Source: Schroders.

How Mobius is investing: One of the largest holdings in the Mobius Emerging Markets Fund is APL Apollo Tubes, India’s biggest and lowest-cost producer of structural steel tubes. It’s a direct play on the building construction growth happening in India, as most of Apollo’s products go into private construction, private homes, high-rise buildings, and even furniture. The steel tubes replace traditional construction materials like wood, aluminum, and cement concrete because they’re cheaper, stronger, easier to construct, and environmentally friendlier.

Some of its other holdings include Metropolis Healthcare, a health-care testing company, Dreamfolks Services, an airline lounge aggregator platform, and software companies CE Info Systems and Persistent Systems. These mostly play on expected growth in travel, healthcare, and outsourced technology demand.

How you can invest: You could consider a broad market index ETF like the Franklin FTSE India UCITS ETF (ticker: FLIN; expense ratio: 0.19%), or the iShares MSCI India ETF (INDA; 0.64%). Alternatively, you might look into the Columbia India Consumer ETF (INCO; 0.75%) if you prefer to focus your bet on India’s fast-growing consumer industry.

Idea #2: Taiwan, for driving AI.

India may be Mobius’ most-favored investment spot, but Taiwan is the emerging economy where the fund’s got the most money allocated – at least right now. Mobius says that won’t last: eventually India will hold that crown. See, Taiwan’s not the up-and-comer that India is: its companies are more mature, with slower growth rates, but its appeal now is driven by the fund’s bullish outlook on the semiconductor industry, where Taiwan is a giant. The rapid rise of artificial intelligence (AI) applications, such as machine learning and deep learning, require specialized hardware to perform computations efficiently. This will increase demand for specialized chips – and Taiwan is home to the world’s biggest providers of semiconductor manufacturing and design.

How Mobius is investing: The fund has invested in a number of “fabless” semiconductor companies (meaning: they outsource the fabrication of the chips). These are asset-light companies that specialize in designing, and selling the hardware and semiconductor chips. This business model allows the companies to concentrate on developing their intellectual property portfolios while saving costs and benefiting from economies of scale. Some of the fund’s investments across the semiconductor value chain include: SINBON Electronics, eMemory Technology Inc, Zilltek Technology, Elite Material, WIN Semiconductors, and Parade Technologies.

About 70 percent of growth this decade is predicted to be driven by just three industries: automotive, computation and data storage, and wireless. Source: McKinsey.

How you can invest: You don’t need a specific ETF that tracks just Taiwanese semiconductor companies. Investing in a broad market ETF like the iShares MSCI Taiwan ETF (EWT; 0.58%) will give you a generous exposure to the semiconductor value chain.

Idea #3: South Korea, for K-pop and cosmetics.

South Korea doesn’t just sell stuff abroad – it exports with style. Its K-pop and K-dramas have devoted fans around the world, and so do its many skincare companies. (And that’s to say nothing of the customer base of its multinational electronics giant Samsung.)

How Mobius is investing: Skincare and cosmetics are a thing of investment beauty. And South Korea is a leader here, particularly in the electronic enhancement of beauty. The fund owns Classys, which makes medical cosmetic face and skin devices that target everything from facial lifting and tightening to wrinkle treatment and body fat reduction. The medical aesthetics market is worth checking out: it’s expected to grow an average of 12% annually till 2028, led by a global surge in non-invasive cosmetic procedures. Classys is poised to take advantage of current trends and expand in K-culture-influenced places all around the world.

How you can invest: You might consider investing in the iShares MSCI Korea UCITS ETF USD (Dist) (IKOR; 0.74%) to gain broad exposure to the South Korean stock market. But keep in mind: because electronics are a big part of the country’s economy, the broad market ETF will give you a lot of exposure to the tech industry. For a more tailored focus, consider the KPOP & Korean Entertainment ETF (KPOP; 0.75%) or pick from one of the ETF's holdings, like Kakao, or JYP Entertainment, if you prefer single stock exposure.