Mark Mobius Bets on Brazil, Says Bolsonaro Is a ‘Terrific’ President

(Bloomberg) -- The veteran emerging-market investor Mark Mobius said he plans to add to his Brazil holdings, lauding the first few months of President Jair Bolsonaro's administration even as other investors have shown skepticism.

Mobius, who left Franklin Templeton Investments in 2018 to set up Mobius Capital Partners, said the president's performance has been “terrific” as he works to push through a pension overhaul that analysts see as key to revitalizing Brazil's economy. He expects the bill to pass this year and predicted more money will flow into Brazil as the agenda takes hold.

“The direction of Brazil is very good,” Mobius, 82, said at an event in Sao Paulo. “Bolsonaro doesn't know very much about economics, but he's picking the right people and letting them do their job.”

Mobius is almost always bullish on emerging markets, but his confidence in Brazil and especially Bolsonaro stands in contrast to concerns expressed recently by the likes of JPMorgan Chase & Co. and Goldman Sachs Group Inc. as the outlook for the pension overhaul dimmed in recent months. The Ibovespa stock gauge has fallen more than 10 percent in dollar terms since hitting a record high in mid-March, among the world's worst performances.

According to Mobius, even if objections from opposition lawmakers means the pension reform is watered down to eliminate half its savings, it would still be positive for the country. Economists now estimate the government will save about 600 billion reais ($151 billion) in 10 years with the social security overhaul, versus the original goal of 1.1 trillion reais.

Among Brazilian stocks, Mobius currently likes manufacturer Iochpe Maxion SA and retailer Lojas Americanas SA, which should benefit from faster growth.

“We think the consumer will come back in Brazil,” he said.

Speaking about the outlook for emerging markets as a whole, Mobius shrugged off trade fears and said developing-nation currencies are cheap.

He also added that he's optimistic about Argentina ahead of the presidential elections scheduled for October in which the frontrunners are current center-right President Mauricio Macri and the leftist former President Cristina Fernandez de Kirchner.

”The changes that are taking place in Brazil are having an impact in Argentina,” Mobius said.

To contact the reporter on this story: Vinícius Andrade in São Paulo at vandrade3@bloomberg.net

To contact the editors responsible for this story: Brad Olesen at bolesen3@bloomberg.net, Brendan Walsh, Julia Leite

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