“All the world’s a stage, and all the men and women merely players,” Mark Mobius might have imagined himself intoning many years ago while pursuing an education in acting and stage direction at U.S. universities. Alas, it wasn’t Shakespeare who turned the world into Mobius’ stage, but Sir John Templeton (of Franklin Templeton fame) when he recognized the man’s aptitude for picking stocks. It was 1987 when he asked Mobius to run the newly formed emerging markets division at Templeton, Galbraith & Hansberger.
“I didn’t really know what I was getting into,” concedes Mobius. “Remember, in those days most countries did not welcome foreign investment.”
Indeed, “emerging markets” was a new term, coined by the International Finance Corp., and a mere six places (Mexico, Hong Kong, the Philippines, Malaysia, Singapore and Thailand) were available for investment. The rest of the world either didn’t have public companies or public markets or did not have custodial services that allowed investors and managers to move cash in and out of their countries.
Mobius opened a small office in Hong Kong and hired two Chinese analysts who stayed with him for more than 30 years at Franklin Templeton, before he became founding partner of Mobius Capital Partners. During his 40 years on the beat, investable foreign markets have surged to about 70 countries (as they achieved market liquidity, transparency and custodial services), and Mobius has overseen investment funds totaling more than $50 billion in assets.
It is not a stretch to designate Mobius as the man who pioneered emerging market investing.
TOASTED SCORPIONS
Mobius, 86, operates from a home office in Dubai these days, a consequence of the COVID-19 pandemic closing one country after another to travel. It was Dubai, where he had already bought a few apartments years prior, that remained mostly open and proved suitable — though Mobius Capital Partners maintains a London office to which he makes occasional visits. While he still maintains an apartment in Singapore (his pre-pandemic dwelling), Mobius now considers Dubai home because of its convenience, largely due to Emirates Airlines, which supports his aggressive travel schedule in good style.
“Emirates Airlines and Singapore Airlines are both terrific. American airlines have some things to learn from them,” he says.
For starters, Emirates and Singapore airlines have extensive global networks with direct flights to many major international cities. Secondly, their service is standout, with Emirates picking up business travelers at their homes for the trek to the airport and providing transportation to travelers’ hotels after arriving at their destinations.
“The service they provide is really quite remarkable.”
Having eaten his way around the world many times over — traveling more than 1 million miles visiting 112 countries — one could consider Mobius an authority on cuisine. He points to Hong Kong and China as the places where the best foods are prepared, while also paying homage to Malaysian and Indonesian cuisines.
“First of all, China has got an incredible variety of things. Secondly, the wide variety of ingredients they put into their food is incredible,” he says. “Thirdly, it is quite healthy, particularly in the south. A lot of the food is steamed, and it is quickly cooked so that it retains its flavor and nutrients.”
Among the exotic dishes eaten has been scorpions on toast.
“It was sort of like eating crispy shrimp, but it has a little bit of a bite to it, so a little bit of a stingy taste.”
AN OFFER HE COULDN’T REFUSE
Mobius fell for Asia after spending a “life-
changing” three months in Japan as part of Syracuse University’s Overseas Training Program.
“It was like a culture shock,” recalls Mobius. “I was so impressed by the Japanese way of doing things. It was completely different, so at that time I vowed that I would return to Japan and Asia generally.”
After earning his Ph.D. from MIT, Mobius did precisely that, taking a job with International Research Associates, a survey research firm where he conducted consumer surveys on behalf of Avon and several airlines. He also lived in Korea and Thailand for a year each, and then moved on to Hong Kong, where he started his own research firm.
One of his clients was a company named Determined Productions, run by a woman who bought the rights from Charles Schultz and his Peanuts cartoon strip to sell Snoopy merchandise, which she was manufacturing in Asia.
“I started getting involved in helping her to inspect goods and getting around the manufacturers who were trying to cheat her,” he says. “One day I asked her, ‘Why aren’t you selling here in Asia?’ She said, ‘Do you think they would like Snoopy?’ I said, ‘Of course. They have children. They would love to have these kinds of toys.’”
Selling the comic strip character’s gear in Asia proved so successful the revenue exceeded the size of his research firm’s cash flow.
“My consulting business was now really a Snoopy distribution business because the product had become so big,” he says.
One of his research firm projects called for a stock market analysis that Mobius admittedly knew nothing about. Nonetheless, he was able to use a head-and-shoulders pattern analysis to discern the market was headed for a fall. When his forecast came to pass, Mobius realized an interest in the stock market. In time, he came across a person running Vickers da Costa, one of the largest stock brokerage firms in Hong Kong. He handed off his research firm to his Chinese colleagues and became a securities analyst.
Two years into that assignment, Mobius, at his boss’ request, opened an office in Taiwan, where an investment bank named International Finance Corp. was opened. Mobius was named to its board of directors and later made president of the organization.
“That was quite a nice job because I would be chauffeur-driven from my apartment to the office and would go to The Banker’s Club for lunch,” he says. “It was a great life.”
More important than the perks was the International Investment Trust’s decision to start an emerging markets division that grabbed the attention of John Templeton. Mobius got a call from Tom Hansberger, one of his partners at the firm, and was told Templeton was also interested in emerging markets and wanted to create a fund to capitalize on them.
“He approached me and said, ‘Let’s raise $100 million in New York and do this emerging markets fund.’ It was a great temptation for me because it enabled me to really expand out of Taiwan into something really exciting. But it was a tough decision as well because I didn’t really know what I was getting into,” he reminisces. “But emerging markets sounded optimistic, and I was fascinated by that.”
It was also a striking move by Templeton, which had no operations outside U.S. borders at the time. Mobius opened a Hong Kong office and forever changed that. Then came a Singapore office. In 1993, The Franklin Organization purchased Templeton, Galbraith & Hansberger, and that transaction lit a fuse to the emerging markets fund.
“Franklin was an incredible sales organization, and immediately the emerging markets fund started taking off, and we began opening up other funds,” Mobius recollects. “We went from $100 million in 1987 to $60 billion. Of course, by that time I had offices all over the place.”
Those offices were spread among Argentina, Brazil, Korea, Mexico, Poland, Singapore, Vietnam and even Russia.
“That was really a defining moment for me because I created a whole new world.”
THE FRUGAL BILLIONAIRE
Mobius never had a formal mentoring relationship with John Templeton, but he cites him as that kind of influence on his life and career. Beyond being given the opportunity of a lifetime, Mobius observed, admired and emulated Templeton’s sensibilities.
“Here was a guy who was a billionaire, and yet he was so frugal and careful with money. A very soft spoken, kind-hearted person. He treated everyone with great respect.”
At the end of his life, Templeton used his fortune to establish the Templeton Prize in 1972, the world’s largest annual award given to an individual. Its purpose is to honor individuals whose achievements advanced John Templeton’s philanthropic vision by harnessing the power of the sciences to explore the deepest questions of the universe and humankind’s place and purpose within it. Recipients have included Jane Goodall, Francis Collins, Mother Theresa, Desmond Tutu, the Dalai Lama and Aleksandr Solzhenitsyn.
He was knighted Sir John Templeton in 1987 by Queen Elizabeth II for his philanthropy, including The John Templeton Foundation and his endowment of Templeton College, Oxford.
Like Templeton, Mobius values thrift, a characteristic also instilled by his parents, who never borrowed money or carried a mortgage.
“Everything was done with cash.”
Mobius, following in his parents’ footsteps, has never borrowed. When he does spend, it’s generally on travel and taking friends and associates to dinner. He recently took one of his interns on an all-expenses paid trip to the United States. He also donated money to Boston University to support an archeological project it’s conducting in Mexico.
He’s still a fancier of live theater productions, recently attending the Broadway performance of Music Man.
LOVE BEYOND WORDS
Mobius started life on Long Island, N.Y., in a town named Bellmore, where he attended Mecham High. He is the product of immigrant parents, a German father and Puerto Rican mother, who met, fell in love and married in New York City, even though they could barely communicate with one another because of their German versus Spanish language barrier. Father was a baker, opening his own bakery, and mother was a riveter during World War II.
Mobius dreamed of a career on the stage, as a method actor and theater director. When he learned of the psychology involved in method acting, he studied mass media psychology at Boston University. Later came a scholarship to Syracuse University, as well as continued studies at the University of New Mexico, where he got involved in experimental psychology (running rats through mazes among other experiments), before moving to MIT for a Ph.D. in economics and political science. There was also a stint at the University of Wisconsin.
“I was a professional student. I really didn’t want to leave university,” he told an interviewer on a Bloomberg podcast. “But then, finally, when I got my Ph.D., I said, ‘OK, let’s get real. Let’s find out what I should be doing in this world.’”
Along came many influences from the business and investment arenas, chief among them the proposition from Templeton. During his years at Franklin Templeton, Mobius’ team expanded to as many as 60 people.
NEW KIDS ON THE BLOCK
Two big game-changers that propelled emerging markets, according to Mobius, were the rise of China with its vast market and rapid development, and the advent of exchange-traded funds, which lowered fees and promoted indexing. Interestingly, Mobius started his own firm to move away from indexing in favor of actively managed funds, which he says allows him and his team to look more deeply into the individual companies that comprise their funds.
Today there are about 70 investable countries, and Mobius Capital Partners monitors them all, as well as so-called frontier markets on the cusp of becoming emerging economies.
“We had a frontier fund, but it was very difficult to invest because the liquidity was not there,” he says. “If you’re running a billion-
dollar fund, you have got to buy a lot of stocks in order to get that money invested, and there aren’t that many frontier-market stocks. I would say frontier markets is an interesting concept, but it is not very practical.”
Over the years, he has learned it’s more important to assess the quality of the people behind the company, rather than strictly the company’s financial performance.
“That is really the key,” he remarks. “More and more I find you have to dig deeper than the balance sheet, the industry, etc. It’s the people running the company where you get the best insights and best results.”
Mobius Capital Partners focuses mostly on mid-cap stocks proffered by smaller-scale companies that often go unnoticed by others.
“If we do our homework, we can get some good investment bargains,” he says. “We’re bottom-up investors in the sense that we look at the companies intensely. But that doesn’t mean we ignore the macro top-down approach. A company can survive in a very difficult environment, and you shouldn’t be afraid to go into a country where the environment is not ideal, as long as you can get money in and out. That’s really the key.”
Today he counts India as the world’s top emerging market, in part based on demographic factors, such as the country’s youth, sporting a massive 1.4 billion population with an average age of 26. Another hotspot is Brazil, whose economy Mobius says is making a comeback after running aground in recent years. He’s also a longtime enthusiast for Taiwan, where decades of peace, democracy and technological advancement have resulted in vigorous GDP growth.
“Taiwan still looks very good for us,” he says, despite the increasingly aggressive posture being struck by the mainland China government and its threats of forcibly taking the island nation back under its purview. While acknowledging the threat, Mobius says, “I don’t see that happening anytime soon.” He defines Taiwan as “an incredible place with wonderful people. My time in Taiwan was very happy. I found out how hard working these people are, how smart and open minded.”
He also sees great opportunities in Africa, particularly in Kenya, Nigeria and South Africa.
The Mobius team, which works virtually using a WhatsApp site to communicate with one another, has also moved into private equity investing because it found many nonlisted investment opportunities, as well as listed companies, with basically zero liquidity.
“We decided to do a private equity fund where the holding period for the clients would be five to seven years,” he says, “so we can develop these companies and eventually bring them to market.”
GOING MACRO ON INFLATION AND TECHNOLOGY
Of particular excitement to Mobius these days is the rapid advance of new technologies.
Indeed, technology plays a prominent role in Mobius’ book The Inflation Myth and the Wonderful World of Deflation. It is technology, he says, that is creating a deflationary environment, lowering the cost of goods and services, while improving their quality.
He insists inflation is a myth because the Consumer Price Index used by central banks is riddled with flaws. For example, when consumers are surveyed they are unlikely to admit many of the goods and services on their spending list, such as sex, gambling and drugs, creating a distorted basket of monitored goods and services. Secondly, each person’s spending differs from others, making the CPI average inapplicable to many people. Rather, he argues, central banks would be better off monitoring the money supply. He points to the speed of “money inflation,” as central banks print and circulate money, which debases the world’s currencies and promotes inflation.
Fortunately, that has been largely offset by the efficiency of new technologies making products and services better and cheaper.
“The economists have it all wrong,” he says. “I don’t know where they came up with the 2 percent inflation target. This is some very strange central bank thing. They should be trying to achieve deflation; in other words, cheaper goods, cheaper services. That is what’s happening anyway, but it is not being measured.”
He also observes that central banks are gradually losing control of their currencies as people use crypto, such as bitcoin, as their currency of choice.
NO EXITING STAGE LEFT
Though Mobius never did become the stage actor and director of his early aspirations, all the world did become his stage, and it brought with it experiences vaster and more exotic than Broadway could have possibly offered.
There is no going back now. Mark Mobius has been typecast. He is an international financial player who helps develop budding companies in emerging economies to the benefit of investors — and that is a role he has no interest in surrendering.
Mike Consol (m.consol@irei.com) is senior editor of Real Assets Adviser. Follow him on Twitter (@mikeconsol) and LinkedIn (linkedIn.com/in/mikeconsol) to read his latest postings.