- Legendary emerging markets investor Mark Mobius warned that markets have “not hit an absolute bottom yet,” during the coronavirus driven turmoil gripping the financial world.
- After record falls in March, markets have somewhat recovered at the beginning of April, but Mobius warned of more damage to come.
- “We might see a double bottom,” he told CNBC in an interview Tuesday.
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A recent recovery in financial markets after weeks of intense turmoil is likely to be short-lived, according to legendary emerging markets investor Mark Mobius, who warned Tuesday of the “incredible” implications of the global coronavirus shutdown.
Mobius, the founder of the eponymous Mobius Capital, said markets have the potential to sink even further as banks begin posting their earnings during ongoing volatility caused by the coronavirus pandemic.
“I don’t think we’re at the absolute bottom yet because the implications of this shutdown are incredible,” Mobius said in an interview with CNBC aired Tuesday.
Markets have been volatile over the past month due to rising tensions over coronavirus, suffering wild swings and record-breaking falls as investors scrambled to make sense of the virus’ likely economic impact.
At the time of writing, there have been more than 126,000 deaths from the virus, which has infected almost 2 million people worldwide, according to data by John Hopkins University.
“Although there are some opportunities to buy, I would say it’s probably a good idea to keep some powder dry for another downturn. We might see a double bottom,” Mobius told CNBC.
Although he did not elaborate, Mobius’ comment about keeping some powder dry likely meant retaining liquidity such as holding cash, or holding other liquid positions.
Mobius’ comments came as stocks recover from recent lows. The S&P 500 last week posted a 12% weekly gain, its best weekly return since 1974, while the Dow Jones industrial average rose 13% in the week
Markets were spurred on by the Federal Reserve’s announcement of an additional $US2.3 trillion programme of aid to help weather the economic storm caused by the virus and subsequent lock down.
Trump wants to reopen the US to protect the economy
“We think that some of the governors will be in really good shape to open up even sooner” than the end of the month, Trump told reporters Tuesday, according to a report from Reuters.
The president has persistently suggested that he wants to open the US back up as soon as possible, likely fearing reprisals from voters in November’s election if the economy crashes significantly this year thanks to an extended lockdown.
Trump’s plans, however, remain uncertain, with many in the financial sector expressing scepticism about reopening the economy in short order.
JPMorgan Chase CEO Jamie Dimon on Tuesday said he doesn’t think the US economy will open in May, after the bank posted lower than expected first quarter earnings results.
Although he didn’t put a date on it, Mobius seemed to tacitly endorse Trump’s plans, telling CNBC: “I think we have to open up again in some way, because otherwise the collateral damage is going to be incredible.”
“You think about the people who live day to day … you got to get the economy going again.”