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Mobius: G7 should step in
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September 9, 1998: 7:46 a.m. ET
Fund guru says global leaders should team up on emerging market crisis
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NEW YORK (CNNfn) - While urging world leaders to work together to solve the crisis of emerging markets, closely followed fund manager Mark Mobius said Wednesday investors with a tolerance for risk should not rule out the prospect of putting money into Russia.
Mobius, managing director of Templeton Asset Management, told CNNfn's "Business Day" that the firm's Russia fund is currently holding steady until the political situation there clarifies.
"We are standing still with that fund with 30 percent in cash and the rest in Russian stocks," he said.
Russian President Boris Yeltsin, who fired the prime minister and key staffers last month, is battling it out with the Communist-led lower house of parliament for approval of his choice for prime minister, Viktor Chernomyrdin.
Since the ruble was effectively allowed to devalue last month, the currency has plummeted more than 60 percent.
But Russia isn't the only emerging market with troubles. Asia is still digging itself out from and economic landslide and Malaysia is implementing radical currency controls to reverse the worst financial crisis to rock the country for decades.
If something isn't done to rescue these ailing countries, Mobius said, other countries could follow suit and investments in all emerging markets could dry up.
"I think they [the G7 countries and International Monetary Fund] should put together a package, but it should be a global package," he said. "We not only have a Russia crisis, we have a global crisis."
Mobius pointed a finger at President Clinton, saying "it's unfortunate" the United States has not taken a more aggressive leadership role to resolve the problems.
"Of course, I can understand with the President preoccupied with other things," he said. "It's very important, I believe, for there to be a global conference to be held among top nations to solve this problem."
Mobius noted that investors who want a presence in high-risk emerging markets would be wise to jump in now. Getting into Russian stocks once the market recovers will be tough to do.
"There are terrific bargains in various parts of the world," he said. "There is no guarantee the market is not going to go down further and people will have losses on paper, but in our view the bargains are numerous. We are not recommending the fund at all, but for people who want exposure it's probably the best way to go."
The Templeton Russia Fund is currently selling at a premium.
Mobius said Russia is about two to three years away from economic recovery, while Asia is facing two years or less.
Since the government's intervention in the Hong Kong stock market last month, which forced investors to cover short positions and pushed prices up, the Templeton fund has resisted buying there as well, Mobius added.
"Right now, we are waiting for the government to finish their buying and then we'll see what happens," he said. "The government intervention was not a good move. We don't know how this game is going to be played out." 
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