Mobius: IPOs to blame for last year's EM slowdown

Franklin Templeton's emerging market heavyweight Mark Mobius has blamed the flood of initial public offerings (IPOs) in emerging markets during 2010 for EM stocks' underperformance last year.

Mobius, who runs the £2bn Templeton Emerging Markets investment trust, said the money pulled out of secondary markets following 2010’s bumper IPO year is to blame for market declines. He pointed to China’s Shanghai index, which posted a fall of 20% last year. His view contrasts with the consensus opinion that shares tumbled in 2011 as part of a wider risk-off trade. “The underperformance across emerging markets last year was directly down to the vast number of IPOs in the emerging market space in 2010 which has driven a lot of money away from the secondary market. It was not because of r...