Mark Mobius, founder of Mobius Capital Partners, also known as the Godfather of Emerging Markets investing, believes that India will be a beneficiary of the slowdown in the Chinese markets.

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China's FDI flows turned negative for the September quarter for the first time since 1998. The CSI 300 is one of the world's worst performing equity indices of 2023, declining nearly 10% so far. The Chinese market is set for its third consecutive annual loss.

"It's already happening. If you look at the numbers, you will see flows of money coming into India have been quite substantial and are increasing. And that includes not only portfolio investment, but also private investments. So India is going to be getting a lot of money that normally would have gone to China. Of course, there will be investors who will want to go into China and keep investments in China, but India is going to be the beneficiary of this trend," Mobius told CNBC-TV18 in an exclusive interaction.

However, foreign institutional investors have been net sellers in the cash market in October and in November so far as well. Despite that, the Indian market has seen FPI investments well ahead of $10 billion so far in 2023.

So far, the Nifty 50 has rallied nearly 1,000 points from the October 26 low of 18,837. At current levels, the Nifty 50 is trading at a one-year forward price-to-earnings ratio of 18.84 times. But Mobius is not perturbed about the valuations of the Indian market.

"What we focus on is not necessarily the price earnings ratio, or the price to book value ratio, but we are looking at return on investment. And it's amazing when we do scans of the Indian market, how many companies have a high return on investment, which is a good indicator of growth prospects, because if you have a high return on investment, you have a lot of money to reinvest and grow. So this is quite a very interesting phenomenon that we've seen," Mobius said.

In an earlier interaction with CNBC-TV18, Mobius had mentioned that India is the place to be when it comes to Emerging Markets investing.

Mobius, the seasoned investor will be stepping back from Mobius Capital Partners, which he co-founded five years ago, after a stint with Templeton for over three-and-a-half decades. As of February, the fund managed $250 million in assets.

However, Mobius is planning a new venture in Dubai, which will also focus on Emerging Markets but will focus more on technology.

"We are looking at companies and situations in areas where AI is being used more extensively, and the entire digitalisation of the economies around the world, particularly in emerging markets is very important and of course, India is probably the best example of that," Mobius said.

However, he has not indentified any specific AI-related stock pick in India just yet. He cited the example of Amazon as a company which is harnessing the AI concept well. "Amazon is using AI and all kinds of other digitisation tools to improve their investments and also to improve what companies and products they should be focused on for their customers," the veteran investor said.

(Edited by : Hormaz Fatakia)

First Published:Nov 23, 2023 12:26 PM IST