Interest Rates Will Hit 9% If Inflation Persists: Mark Mobius

Market-derived expectations on the one-year inflation outlook have tumbled from as high as 6% in March to 3.2%, while the Bloomberg Commodity Index has tumbled from a peak in June thanks to a slowdown in global economic growth.

Mobius also warned investors to take caution with commodities as demand from some key buyers could cool.

“People that are buying commodities are sitting on weaker and weaker currencies,” he said, referencing emerging-market and euro-area buyers. “You’re probably going to see a downturn in commodity prices.”

Mobius, well known for his emerging-markets investments, said he’s putting money to work in India, Taiwan, Brazil and “a little bit in Turkey, and also Vietnam.” He’s urging caution around companies with high debt-equity ratios, and those with low returns on capital.

“These are the two parameters that are very, very crucial in this day and age because of this problem with currencies and high inflation,” he said.

(Image: Bloomberg)