Mobius Says Blindfolded Investor Can Find Value in Russia Stocks

By Ksenia Galouchko

Photographer: Dario Pignatelli/Bloomberg

Templeton Emerging Markets Group Chairman Mark Mobius. Out of Russian equities, Mobius... Read More

Russian stocks are such good value that almost anyone could find some bargains, according to Mark Mobius.
“You could almost be blindfolded and throw a few darts and you’ll hit something that’s cheap,” Mobius, who overseas about $40 billion as chairman of Templeton Emerging Markets Group, said in an interview today. Still, he’s not buying because of sanctions imposed on the nation over the conflict in Ukraine.
Russian equities offer “tremendous value now, but the problem is this inexorable march towards more and more sanctions, particularly from the U.S.,” he said in
an interview with Bloomberg TV’s Guy Johnson and Francine Lacqua from Hong Kong. “We talk to our Russian analysts and every day they are coming up with new bargains. But we won’t put money in because of these sanctions.”
Sanctions imposed by the U.S. and European Union on Russian officials and companies after the March annexation of Crimea and as punishment for Russia’s alleged role in fomenting the uprising have battered Russian assets. Russia’s dollar-denominated RTS Index is the worst performer among major global equity indexes this year with a drop of 28 percent while the ruble has slid 22 percent, the second-worst performance among emerging-market currencies after the Argentine peso.
Russia’s benchmark Micex Index (INDEXCF) trades at 4.6 times estimated earnings, the cheapest level among 21 emerging markets tracked by Bloomberg, and compared to 10.6 times for MSCI Emerging Markets Index. The valuation dropped to a March low on Oct. 10 as the falling oil price and the weakening ruble spurred investor concern about economic growth.
Out of Russian equities, Mobius favors OAO Sberbank, “major” oil companies, supermarket chains and mining companies, including OAO GMK Norilsk Nickel. The weaker ruble is “very, very good” for foreign investors, because it allows to buy more with fewer dollars, he said.