First know that Mark Mobius oversees about $25 billion of emerging-market assets as executive chairman of Templeton Asset Management so has a claim to expertise.Next, that he is talking for television and therefore will be encouraged to make large statements that will hold the viewers attention.
His stated view is that China’s stock market may surpass the US as the world’s largest by value in three years, as state-owned companies sell new shares and the nation’s 1.4 billion people put more of their money into equities.
Mark Mobius said, "The Chinese population is just dipping its toe into equities and they’ve got a long way to go."
According to data compiled by Bloomberg, China’s market is valued at $3.2 trillion, compared with $11.2 trillion in the US, so it is a large claim to say China will overtake in three years. Just possible but perhaps not likely.
The Standard & Poor’s 500 Index, a benchmark for US equities, has gained 4.1% in 2009, while China’s RMB4 trillion ($586 billion) stimulus package lifted the Shanghai Composite Index 75% this year.
Bloomberg reported that not everyone agrees with this dramatic forecast.
Donald Straszheim, a former Merrill Lynch & Co. chief economist who runs the Los Angeles-based Straszheim Global Advisors, said China’s stock market overtaking the US "is possible, but I think people need to understand the difference between the Chinese equity markets and the US equity markets." State-owned companies "dominate" the Shanghai stock exchange while the US stock market consists of private companies.