Submitted by Taps Coogan on the 10th of December 2019 to The Sounding Line.

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Mark Mobius, Mobius Capital Partners founder and emerging markets pioneer, recently spoke with TRT about his outlook on the Turkish economy, the US-China Trade war, the US economy, and other emerging markets.

Especially noteworthy given his longstanding status as a champion of emerging markets, Mr. Mobius reiterates his view that the US-China trade war is not only justified by the nonreciprocal trading relationship that has emerged, but represents more of an opportunity that a liability for emerging market investors as businesses start rerouting the global supply chain outside of China.

Some excerpts from Mark Mobius:

“I think (the US-China trade war) is an opportunity because, with the trade war, a lot of the Chinese manufactures have become uncompetitive in the US market because of the high tariffs. So, there is an opportunity for other countries, like Turkey, to take over some of this manufacturing and it’s already happening. I’ve seen a number of instances where …Chinese manufacturers have moved to places like Veitnam or Bangladesh to manufacture. Two advantages for them this that the wage rates are lower than China and, secondly, they are able to export to the US.”

“Oh, I think there is no question (that the trade war was needed). If you consider the deficit, $300-$400 billion year after year, the deficit with China has been tremendous. And of course, the quid-pro-quo… was not evident with relations with China, particularly with regards to investing in China, being able to establish companies in China. So, the reciprocity was not there. So, I think what Trump did was a step in the right direction, at least for the US, and I think in the long run it will probably be good for China… The relations between the US and China had become so close in terms of trade that it became very evident that something had to be done… I think the people on the ground (in the US), the common consumers, understand the need. but on the other side, they are afraid of being impacted… I think in the long run it will be good for (the US) and for China by the way. As I mentioned, I think reform in China is needed…”

“I am very concerned about Hong Kong’s future, simply because Hong Kong is such a unique place, has been such a free market. As you know, Milton Friedman said that Hong Kong was the best free market in the world and that has been true for so long and it’s an example of what an area can do with free trade, how they can grow and prosper… Now if this crumbles, if this is destroyed, it will a tragedy…”

There is much more to the discussion, so enjoy it above.

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