Mark Mobius expects China's equity bull run to last a while

Templeton Emerging Markets Group boss Mark Mobius is investing more in Chinese equities to take advantage of an anticipated Chinese bull run.

Mobius, who manages about $40bn (£25bn, €32bn), said he has been buying Chinese stocks "across the board", including oil-related companies on expectations that crude oil prices will recover from five-year lows.

While Chinese shares will experience "corrections along the way", they will not enter a bear market any time soon, Mobius told Bloomberg. His $13bn Templeton Asian Growth Fund has returned about 8.5% this year.

Mobius told the news agency: "We are buying more in China because we think this is the beginning of a longer-term bull run.

"Generally speaking, these things last quite a long time. We are getting more and more exposed in China."

The benchmark Shanghai Composite share average has added 19% in the month through 10 December, the second-biggest gain among 93 equity indexes worldwide tracked by Bloomberg.

The index is poised to rally to 3,500, or 19% above the last close, Shenyin & Wanguo Securities forecast in a note to clients.

Investors Beware

On 9 December, state-run newspaper People's Daily joined China's official Xinhua News Agency and the Securities Times with articles emphasising risks in equities.

They followed a similar warning from the nation's securities regulator at the end of last week.

On 4 December, Ken Peng, a strategist at Citigroup's private bank in Hong Kong, termed the equity rally as "irrational".

Andy Xie, a former World Bank economist, called the advance a "bubble" driven by leveraged traders.

Meanwhile, Capital Economics, commenting on the surge in Shanghai equities in a note, said there was "a sense of mania taking hold".

Mobius's optimism puts him in a camp with Morgan Stanley's Hong Kong-based strategist Jonathan Garner, who on 2 December said that there was a possibility of an "ultra-bull" rally where share prices could double in 18 months.