Templeton’s Mark Mobius buying Taiwan stocks

“We have Taiwan assets and we are buying Taiwan assets,” Mobius, 71, said at a fund management conference in Hong Kong yesterday. “There is a lot of positive attitude towards China. I was in Kaohsiung recently where people there say we’re going to get the Chinese visitors.”

Mobius, who oversees US$47 billion in emerging market equities, said he favors Taiwan’s electronics stocks, without specifying which ones. His US$365 million Templeton Emerging Markets Fund has gained 13 percent in the 12 months through yesterday, compared with a 19 percent advance by the MSCI Emerging Markets Index.

Taiwan’s TAIEX Index was the world’s third-worst performing stock benchmark during President Chen Shui-bian’s eight-year rule through the end of 2007, according to Bloomberg data. Chen, due to be replaced by the main opposition party’s Ma Ying-jeou next month, has called for independence from China. Ma was elected March 22 and takes office May 20.

The TAIEX has gained 6.6 percent this year, Asia’s second-best performer after Pakistan’s stock benchmark, as investors bet the new president will boost ties with the mainland and focus on expanding Taiwan’s economy. The MSCI Asia Pacific Index has dropped 8.6 percent in that period.

Taiwan has restricted direct shipping, air and postal links with China since the end of a civil war in 1949.

The mainland sees Taiwan as a province and has threatened it with military force to forestall nationhood.

The TAIEX is valued at 13.9 times estimated earnings, less than the MSCI benchmark’s 14.1 times. The Taiwanese gauge today rose 1.6 percent to 9,066.04, the highest close since Nov. 7.

“Taiwan has been a laggard market in the Asian context,” said Howard Wang, JF Asset Management Ltd.’s head of Greater China, who oversees US$10 billion of assets in that region. “People are very excited by the China element. That’s clearly positive.”

Jim Rogers, the author of “A Bull in China: Investing Profitably in the World’s Greatest Market,” said on March 19 he is investing in Taiwan’s exchange-traded funds in expectation a new president there will bring peace with China.

Taiwan Semiconductor Manufacturing Co., the world’s largest custom-chip maker, has climbed 3.3 percent this month, while Hon Hai Precision Industry Co. has gained 6 percent. The stocks are the Taiex’s biggest constituents.

Mobius also said investors should “start looking” at U.S. equities.

The Standard & Poor’s 500 Index has lost 9.1 percent in 2008. The Dow Jones Industrial Average has fallen 6.8 percent.

“If you look at the global U.S. stocks and European stocks, companies that are invested globally and selling globally, they should do fairly well,” Mobius said.

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