Pakistan is set to benefit from its strategic importance to China, which is seeking to cement relationships with countries surrounding India, Franklin Templeton's Mark Mobius said. "They are trying to secure their lines of transport and communication," he said.
"That means Pakistan is quite critical." Mobius said he wants to start investing in Libya in the next 12 months as the oil producer emerges from civil war and looks to outside investment. The country of six million people benefits from oil resources, potential for tourism and a large land area, the veteran emerging markets investor told journalists on Monday, adding that it had a very well-run stock market.
Libya is in the fourth month of a conflict that has seen rebels revolt against Muammar Gaddafi's 41-year rule in the bloodiest of the Arab Spring uprisings, backed by a Nato bombing campaign designed to help sweep the leader from power. "If this thing is over and they open up, we will be in a flash," Mobius said. "There's no question that whether Gaddafi stays or goes the country is going to open up. Everybody surrounding Gaddafi knows they have to make changes and reform."
The age of mobile phones and the Internet meant people were now better informed, while Libya was suffering from the twin problems of unemployment among well-educated people and inflation. "That combination means political change regardless of where you are," Mobius said. Templeton would start by investing "a few million" dollars in Libya, unless the government were to sell a large state-owned company, Mobius said.
"We would probably not necessarily go into an oil company," he said. "We would probably go into a bank or a consumer products company." The conflict has halted Libyan oil exports, helping push up world crude prices to about $111 a barrel. Libya was previously Africa's third-largest producer.
Libya, meanwhile, boasts tourist sites of historical interest such as the ruins at the World Heritage site of Leptis Magna, which UNESCO describes as "one of the most beautiful cities of the Roman Empire". Libyan rebels this week advanced to within 80 km (50 miles) of Gaddafi's stronghold in the capital Tripoli, though they were being forced to retreat on Friday under a barrage of rocket fire from government forces.
NIGERIAN PROGRESS The World Bank warned this week a protracted struggle for control of Libya could leave it in the hands of extremists. It has been working with Libya since 2006 on plans for economic reform, although many of those plans were scuppered by Gaddafi. Among the top holdings in Templeton's frontier markets fund is telecom services group Orascom Telecom in neighbouring Egypt , where former ruler Hosni Mubarak's regime was brought down in February.
Elsewhere in Africa, Mobius said Nigeria had made progress in terms of economic reform, despite a negative image. Zenith Bank and United Bank for Africa together make up 6 percent of the frontier markets fund. In Asia, Templeton has twice as much invested in China as in India, though the latter will become "more and more important", Mobius said. "We expect India to come up because the growth rate is accelerating; now India is growing as fast as China," he said, though he added that valuations were still "a bit too high".