Markets will be alright in Biden regime, if taxes aren’t raised, says Mark Mobius

Mumbai: Emerging markets guru Mark Mobius says the US stock markets may not be impacted under a Joe Biden regime, as a weakening Democrat hold in the Senate may not allow the new dispensation to implement the promised tax increases.

Biden, 77, is all set to become the 46th President of the United States, while Senator Kamala Harris, 56, who is of Indian and African-American origin, will become the first-ever woman vice-president. “My feeling is, it would be negative if -- and of course this is the big if -- the programme outlined by Biden and Harris is followed through, particularly on tax increases for the wealthy and also for corporations. That would be negative for markets,” Mobius, co-founder of Mobius Capital Partners, said.

Mobius said it is not clear if they will be able to implement the promised tax increases, as there may be deadlock in the Senate, and the Democrats may not be able to implement those. “If that is the case, if they are not able to raise taxes, markets should be alright,” he told ETMarkets.com in an interview from Dubai.

With the US elections behind us, Mobius believes economies should now see a V-shaped recovery globally.

“You will see a lot of these economies growing very rapidly on the back of the negative situation we have seen this year. So, I think things will start to look very good,” he said.

He applauded the progress and success on a vaccine to prevent the deadly coronavirus, which has killed more than a million people worldwide, and wreaked havoc for lives and livelihood. “A vaccine is important, not because everyone is going to be vaccinated. That is not the important thing. The important thing is that a vaccine is available and that news alone will boost confidence as it already has,” said Mobius.

The market veteran sounded upbeat on the prospects of emerging markets, India in particular. “Emerging markets look very good because with the weakening US dollar, the US Dollar Index being down and Asian currencies getting stronger. Then there is going to be more of a move into emerging markets,” he said.

“Of course, India figures prominently in that picture, because the economy is growing fast, has the potential to grow much faster and. In our portfolio, India is the largest individual country now,” he said.

Asked on how would he hypothetically allocate $100,000 of his personal wealth into various investment options, Mobius said he would allocate 30 per cent to the Indian market as he believes growth rates in India are going to make a strong comeback, with a V-shaped recovery next year,

“So, it is very important to be exposed to the Indian market, and I would look at companies that are in the technology area and in infrastructure, companies that make materials for infrastructure -- be it pipes, equipment for construction," he said.