Mark Mobius sees a Covid-19 chance for India

Which are the asset classes one should look at when global markets are in panic mode?Dividend-paying companies that look like they will continue to pay dividends, and gold.Are you looking at increasing your allocation to Indian equities in wake of fewer confirmed coronavirus cases here?Yes, India looks good not only because of low incidence of virus thus far but also because of the desire of manufacturers around the world wanting to diversify away from China as a source of parts and raw materials. It is very important, therefore, for the Indian government to open its doors widely to such industries for investment in India.How concerned are you about the impact of Covid-19 on global growth? Is the panic in world markets justified?To some extent, the panic over coronavirus is justified simply because of the uncertainty that has developed around its spread and the vulnerability that people feel. The result is a kind of freezing of the economic system where people don’t want to travel, don’t want to go to work, etc. More importantly, the fact that the virus began in China and has had its greatest incidence in China is critical since China is such an important source of raw materials and parts for the entire global industrial system.China is now the world’s largest manufacturing centre and companies all over the world depend on Chinese raw materials and parts. For example, the global pharmaceutical industry depends on raw materials from China. The US automobile industry depends on Chinese auto parts, etc. So there definitely will be an impact on global growth. How much? I would estimate a half a percent but it could be higher.Do you see a large stimulus from China or any major action by central banks to combat the impact of the coronavirus outbreak?Yes, central banks around the world will be called upon to take action but the question now is: What action can they take? In Europe, it would be like pushing on a string since interest rates are already in negative territory and even in the US, interest rates are already quite low. One solution might be for central banks to make direct transfers of cash into the bank accounts of individuals.

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