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Mobius sees ageing pressure in emerging markets

GLOBAL – Mark Mobius, Franklin Templeton’s emerging markets guru, says demographics are going to play a big role in emerging markets in the long term.

Mobius said declining birth rates and the demise of the traditional ‘pyramid’ demographics, where there are more young than old people is set to “be a big factor in these markets going forward”.

He told a briefing in London this week that the old-age dependency ratio in China, for example, is increasing more and more.

“You’re going to get a bulge,” in the demographic profile, he said in response to a question from IPE.

He pointed to the Chinese government’s decision to open up the pension market – which has led to western firms such as ING becoming involved.

“It’ll be great for us. The pension funds will grow, so will the markets,” he said, citing the Chilean example. The privatisation of pension funds would see a shift from government bonds to equities, he added.

Earlier this week Standard & Poor’s said asset managers are still bullish about the long-term prospects of emerging markets.

“This optimistic stance comes at a time when global emerging markets have marked their third consecutive year of strong absolute returns and the fifth in which they have outpaced developed markets,” it said.

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