At the NDTV World Summit 2024, Mark Mobius, an ace investor and founder of Mobius Capital Partners LLP, shared his insights on effective investment strategies, focusing on three essential criteria: earnings growth, return on capital invested, and the quality of management. Mobius, now 88 years old, has adjusted his approach to investment metrics.
He has moved away from relying on the price-to-earnings (P/E) ratio, explaining, "This is because the E of P/E is backward-looking." Instead, he emphasizes the importance of return on capital, as a higher return generally indicates lower debt to equity.
In his discussion, Mobius stated that looking at the earnings growth of a company is crucial. However, he highlighted that the most important factor in investment decisions is management quality. "This is why I travel so much. I look at the management and their way of working closely...Because if you don't look at the management quality, you can be misled," he remarked during an interaction with market veteran Ramesh Damani. He also offered advice to younger investors, saying, "Don't be in a rush, and study carefully." Mobius urged them to "listen to the market" to make informed decisions.
Optimism for India's Semiconductor and Real Estate Sectors
Mobius expressed strong confidence in India’s emerging markets, particularly in the semiconductor and real estate sectors. He pointed out that emerging markets are growing at double the pace of developed markets, noting, "All big organisations have realised that free enterprise is required to make countries rich." He highlighted that India is poised to become a leader in the semiconductor industry, stating, "I think India will become a leader or the leader in semiconductor production in the future," citing three key reasons for his optimism: first, there is significant demand; second, India has a relatively open economy; and third, it already possesses a robust software ecosystem.
During his address, Mobius emphasized that the standard of living in India is rising, which he believes will drive new demand for real estate. "Standard of living is going up and people want homes and you got to meet the supply," he said, reinforcing his bullish stance on the real estate sector.
The Indian government has been proactive in supporting the semiconductor industry, having approved five semiconductor units, with construction ongoing at two sites and work on the other three units expected to start soon. These initiatives have attracted nearly ₹1.5 lakh crore in cumulative investment from various companies.
Lauding India’s GST System
In addition to his investment insights, Mobius praised India’s Goods and Services Tax (GST) system, acknowledging the challenges of managing a diverse economy. "The unification (in taxes) is remarkable," he stated. Since its introduction on July 1, 2017, the GST has simplified various tax procedures and minimized cascading effects, contributing to a more cohesive economic environment.
Mobius's extensive experience in emerging markets offers valuable insights for investors looking to capitalize on the growing opportunities in India, particularly in sectors like semiconductors and real estate, where demand is poised to surge in the coming years.
He has moved away from relying on the price-to-earnings (P/E) ratio, explaining, "This is because the E of P/E is backward-looking." Instead, he emphasizes the importance of return on capital, as a higher return generally indicates lower debt to equity.
In his discussion, Mobius stated that looking at the earnings growth of a company is crucial. However, he highlighted that the most important factor in investment decisions is management quality. "This is why I travel so much. I look at the management and their way of working closely...Because if you don't look at the management quality, you can be misled," he remarked during an interaction with market veteran Ramesh Damani. He also offered advice to younger investors, saying, "Don't be in a rush, and study carefully." Mobius urged them to "listen to the market" to make informed decisions.
Optimism for India's Semiconductor and Real Estate Sectors
Mobius expressed strong confidence in India’s emerging markets, particularly in the semiconductor and real estate sectors. He pointed out that emerging markets are growing at double the pace of developed markets, noting, "All big organisations have realised that free enterprise is required to make countries rich." He highlighted that India is poised to become a leader in the semiconductor industry, stating, "I think India will become a leader or the leader in semiconductor production in the future," citing three key reasons for his optimism: first, there is significant demand; second, India has a relatively open economy; and third, it already possesses a robust software ecosystem.
During his address, Mobius emphasized that the standard of living in India is rising, which he believes will drive new demand for real estate. "Standard of living is going up and people want homes and you got to meet the supply," he said, reinforcing his bullish stance on the real estate sector.
The Indian government has been proactive in supporting the semiconductor industry, having approved five semiconductor units, with construction ongoing at two sites and work on the other three units expected to start soon. These initiatives have attracted nearly ₹1.5 lakh crore in cumulative investment from various companies.
Lauding India’s GST System
In addition to his investment insights, Mobius praised India’s Goods and Services Tax (GST) system, acknowledging the challenges of managing a diverse economy. "The unification (in taxes) is remarkable," he stated. Since its introduction on July 1, 2017, the GST has simplified various tax procedures and minimized cascading effects, contributing to a more cohesive economic environment.
Mobius's extensive experience in emerging markets offers valuable insights for investors looking to capitalize on the growing opportunities in India, particularly in sectors like semiconductors and real estate, where demand is poised to surge in the coming years.
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