Emerging markets veteran Mark Mobius remains optimistic about India's investment prospects, maintaining a significant 30% allocation of his portfolio to the country while expecting solid returns in the coming year. The seasoned investor, known for his expertise in emerging markets, shared his strategic outlook and investment philosophy in a recent interview.

Portfolio Strategy and Market Outlook

Mobius advocates for a cautious approach in the current uncertain market environment, recommending investors maintain approximately 20% of their holdings in cash reserves. His investment strategy emphasizes capital preservation, utilizing hedging mechanisms including put options to protect against downside risks.

India vs China Investment Perspective

The veteran investor expresses a clear preference for India over China, citing several structural advantages. He believes India will outperform due to favorable market dynamics, ongoing economic reforms, and the increasing shift of international sourcing from China to India. The growing tensions between China and America have created additional caution around Chinese investments, further supporting India's relative attractiveness.

Mobius points to India's superior growth numbers and demographic advantages, including its large population, as key factors supporting his bullish stance. The ongoing transformation in global supply chains, with companies diversifying away from China, positions India as a primary beneficiary of this strategic shift.

Expected Returns and Investment Focus Areas

For 2026, Mobius projects low double-digit returns of 12-15% from Indian markets. He acknowledges that investor caution will likely persist, with market performance significantly dependent on developments in the US economy and dollar strength.

Key Investment Themes

Mobius identifies several compelling sectors within the Indian market:

Technology Adoption: The investor focuses on companies that effectively utilize technology rather than those creating it, recognizing the transformative impact of technological integration across industries.

Retail Transformation: Online shopping, delivery systems, and technology adoption are revolutionizing India's retail landscape, presenting significant investment opportunities.

Manufacturing Excellence: Mobius expresses particular enthusiasm about India's potential as a major supplier of computer hardware, viewing Apple's sourcing initiatives from India as just the beginning of a broader trend.

Emerging Opportunities in Technology

The investor highlights an often-overlooked opportunity in chip software development, noting that substantial chip coding work is already being performed in India by international firms. He believes this foundation could eventually lead to India developing its own comprehensive chip industry, representing a significant long-term growth opportunity.

Market Approach and Risk Management

Mobius maintains a disciplined approach to market participation, notably avoiding India's active IPO market due to concerns about seller motivations and potential volatility. His strategy emphasizes investing in established companies with proven business models rather than participating in new public offerings.

The investor's broader emerging markets strategy includes purchasing US stocks with significant emerging market exposure, leveraging the liquidity of US markets while maintaining exposure to emerging market growth dynamics. This approach allows for diversification while capitalizing on the operational presence of US companies in developing economies.

Veteran emerging markets investor Mark Mobius continues to view India as his primary investment destination, even in the face of proposed 50% US tariffs on Indian exports. This stance underscores his confidence in the resilience and adaptability of the Indian market.

Impact of Proposed US Tariffs

Mobius acknowledges that certain sectors, including pharmaceuticals, diamonds, gems, and apparel, would face negative impacts from the proposed tariffs. However, he remains optimistic about Indian entrepreneurs' ability to navigate these challenges.

Adaptive Strategies

According to Mobius, Indian businesses may find innovative solutions to circumvent high US tariffs:

• Shifting manufacturing to other countries, such as those in Africa
• Leveraging alternative markets to maintain competitiveness

Market Stability and Growth

Despite global economic pressures, Mobius highlights two key factors supporting his bullish outlook on India:

1. Relative stability of Indian markets
2. Tremendous growth pace of the domestic market

Foreign Investment Outlook

While foreign investors have approached India cautiously over the past year, with China recently outperforming, Mobius predicts a shift in this trend:

• Expects foreign investors to return to India within 3-4 months
• Anticipates resolution of trade disputes, improving investor sentiment

Government Initiatives

Mobius commends the Indian government's efforts under Prime Minister Narendra Modi:

• Reduction in bureaucracy
• Easing of restrictions on domestic manufacturers

These measures are seen as positive long-term factors for India's economic growth.

Global Monetary Policy Impact

Discussing broader market trends, Mobius notes the potential effects of US monetary policy:

• Falling US dollar interest rates may drive investors from cash to equities
• This shift could benefit both US and emerging markets
• American investors might seek diversification, potentially increasing capital flow to markets like India

In conclusion, despite short-term challenges posed by potential US tariffs, Mark Mobius remains confident in India's long-term investment potential. His outlook is buoyed by the country's market stability, domestic growth, and ongoing economic reforms.