The famed emerging markets investor sees Brazilian stocks gaining around 50 percent over the next four years. Fred Katayama reports.
A scandal surrounding Brazilian President Michel Temer sparks protests just as Latin America's largest economy shows signs of emerging from its recession. But emerging markets guru Mark Mobius of Templeton is bullish on Brazil's prospects. He says its battered stocks will bounce back sharply. SOUNDBITE: MARK MOBIUS, EXECUTIVE CHAIRMAN, TEMPLETON EMERGING MARKETS GROUP, (ENGLISH) SAYING: "I think you're looking over a three or four-year period maybe 40, 50 percent upside because we've come down a lot ... I believe that this Lava Jato scandal situation is going to be very very good for Brazil because what it means is that reform will be forced into the government." Brazil's Bovespa stock index lost half its value over six years since 2010 and has since regained much of that ground. But Mobius sees even more upside, arguing that a revival of the economy will boost income and drive consumer stocks higher. He particularly likes stocks in the beverage and consumer banking sectors. Financial advisor Ken Kamen of Mercadien Asset Management says there's a place for emerging markets stocks in portfolios for small investors especially as global economies expand. SOUNDBITE: KEN KAMEN, PRESIDENT, MERCADIEN ASSET MANAGEMENT, (ENGLISH) SAYING: "There's this reflation trade that's coming along, but I think in a world where things are still very uncertain and you have economies still building themselves back, you want to be there because there's this phrase, 'You've got to buy in when they're cryin'." Emerging markets equities have vastly underperformed the S&P 500 over the last few years but are outgunning it this year with a nearly 17 percent return.