Mark Mobius sees immense potential for India in tech innovation and manufacturing
“There is an incredible opportunity for India to become the centre for technical innovation and technical manufacturing. And that will depend on the degree to which the Indian government is able to attract these large manufacturers, from China from Taiwan from US, Japan, etc.,” Mobius said in an exclusive interaction with CNBC-TV18.
Mobius also discussed his market philosophy and what investors must keep in mind to make sound investment decisions.
This is the verbatim transcript of the interview.
Q. He had a humble background but through wise investments, patience, and frugality, managed to earn a fortune over a 20 to 30 year period. So what does this really mean? And what’s the lesson in all of this for people getting into the stock market right now.
A. A lot of people think that I’ve got to have a college degree, or go to a university, or finish high school. All these things are not necessary if you are willing to learn, the books are available in the library, you can go to any library, and now with the internet, it opens the whole world of education to anyone who’s willing to buy a cell phone or a small computer.
So the education aspect is something that’s very critical. And you must not think that it necessarily means a degree is just a piece of paper. It’s what you have in your brain, what you’ve learned, and what you’ve practiced. I would say 50% to 60% of the people who have degrees normally don’t go into the field in which they were educated; they go into something different. They could have done that without having the degree. So this is very important. Don’t forget about the degrees and the paperwork. Think about what you’re actually learning, and how you’re applying that learning to your life.
Q. You’ve also spoken and quoted someone to say that it’s your attitude, not your aptitude, which decides your altitude. Is that very important in the current context?
A. Exactly. You see many people around the world have a great formal education, have a great aptitude for a certain field, but they don’t use it or apply it. Therefore, they’re not going to be successful. They don’t have the right attitude. In other words, they don’t have the attitude to be successful, to learn more, to keep an open mind, and to progress. So that’s why I say attitude is more important than aptitude.
Q. Speaking about the emotion potion, you want investors to avoid the emotion potion in the markets, avoid a herd mentality, stay calm, be knowledgeable, study the markets, well study the stock well, and then decide your call. What would be your advice and context in the current environment in India and globally?
A. In the book, I mentioned that emotion is the potion. In other words, the markets are driven more by emotion than by intellect or by rationality. In fact, that’s the case of our lives. If you look at your normal daily life, you find that so much of it is driven by emotion. When it comes to investing, you’ve got to be much more rational. You’ve got to observe emotion, understand emotion, understand the crowd behaviour and use that understanding to invest but don’t get involved yourself in the emotion of the market. And I remember John Templeton saying the best way to invest is to buy when others are selling and sell when others are aggressively buying. So this is the kind of thing that you got to recognise when you’re looking at the market.
Q. Mark, coming back to the India scenario. There are of course a lot of things which affect the sentiment in the markets and currently, there is a certain degree of volatility, a decline in the Sensex and Nifty that we’ve seen because of it Indian elections that is what several experts suggest. Do you think this volatility is indeed during due to elections? Or are there other factors at play? How should investors see this?
A. There’s no question the elections are having an impact. Because people do look at the elections very carefully. Everyone is involved emotionally, in one degree or another, and they tend to react emotionally in the market itself. So now there’s an opportunity. Because if you can look at the emotion in the market, and recognise that perhaps the emotion, the direction of the market driven by emotion, is wrong, then you should do the opposite thing. In other words, if everyone’s selling, maybe you should be buying, and vice versa, of course, based on the actual fundamentals of the companies in which you are investing. So, yes, I would say that probably the Indian elections are having a big impact on the emotion of the market.
Q. We’ve seen at least 47,000 crore offloaded by foreign institutional investors since the time the elections began in India in April. Approximately $6 billion have been offloaded. What according to you would be the reasons for this?
A. It’s probably because the uncertainty arising from the election. A lot of investors, not only foreign investors, but investors anywhere in the world, including Indian investors tend to hate uncertainty. They don’t want it to be uncertain. And of course, as you mentioned, the outcome of the election is uncertain. You know, some people say that Modi will get a supermajority and that he’ll be able to get more seats in Congress. Other people will say, No, he may not. And that creates uncertainty. So whenever there’s uncertainty builds that okay, I’m out of here. I’m gonna wait until I find out what’s really going to happen. And then I’ll invest. So uncertainty is a big driver to this. And that’s probably what’s happening with foreign investors.
Q. Let me ask you about two to three scenarios. One is, if the prime minister the BJP, the NDA, they crossed the 400 seats mark, as they have been suggesting and claiming that they will win big they will win with record numbers, if they manage to do that, how do you see the markets reacting and what will be the growth momentum and investment momentum and attitude towards India?
A I think if they do that, the market will probably move up barring any other factor coming in, but I would say it will be good news for the market. More importantly, it will be good for the economy. Because then the policy objectives of growth and the adoption of technology will be very important. One of the key aspects now for India will be its ability to attract foreign technological investments, semiconductors, software, etc. There is an incredible opportunity for India to become the centre for technical innovation and technical manufacturing. And that will depend on the degree to which the Indian government is able to attract these large manufacturers, from China from Taiwan from US, Japan, etc. And that, of course, depends on the degree of bureaucracy and restrictions that the Indian government imposes. And my reading is that the Modi government will probably try to make it more attractive and loosen up these restrictions, which will attract more foreign investors.
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