Emerging markets stalwart Mobius backs Greece plan
Plans by the new Greek government to renegotiate the terms of its debt are the correct route, according to major emerging markets manager Mark Mobius.
The Franklin Templeton manager, who runs the group’s £1.9bn Templeton Emerging Markets Investment Trust, said the outcome of the election in Greece showed there was a need for “dramatic changes and bold action” in terms of debt in the Mediterranean country and the wider eurozone.
“We believe there is no question that a continuing emphasis on cutting spending and investment will not help Greece recover from the current situation,” Mr Mobius said in a statement.
“What is needed, in our view, is more investment and a path toward recovery. To achieve that, we believe the new government’s emphasis on easing the pain to the ordinary Greek citizen is the correct path.
“Also, we think its emphasis on renegotiation of the stringent terms imposed on the country would be positive in terms of injecting more optimism.”
The manager did acknowledge, however, a renegotiation with its creditors - the European Commission, the European Central Bank (ECB) and the International Monetary Fund - would prove “extremely challenging”.
“February 28 will mark a key milestone,” he said.
“It is the day Greece’s financial bailout is due to expire. It remains to be seen if Greece can negotiate an extension or some other measure to avoid default and allow Greek banks to continue to access ECB liquidity.”
Mr Mobius added there was “no question” Greece should and likely would stay in the eurozone, highlighting that after World War Two, Germany was bailed out, its debts forgiven and a massive investment programme.
“This is a time when the EU should engage in an investment programme for Greece and other indebted countries to encourage economic growth, in our view,” he said.
