Mobius sees 2007 good year for equity

By Herbert Lash

NEW YORK (Reuters) - A flood of money being sent overseas by U.S. investors, reasonable equity valuations and worldwide optimism all indicate 2007 will be another good year for international markets, emerging markets guru Mark Mobius said on Monday.

Investments by hedge funds and private equity firms in pre-IPO companies, in addition to money from institutional investors, have increased liquidity in global markets, Mobius told the Reuters Investment Outlook 2007 Summit in New York.

Mobius, who spoke from Dubai, said markets have not reached a bubble stage and equity valuations have not become stretched, with the exception of certain markets, such as India's software and pharmaceutical sectors.

Price-to-earnings multiples of emerging market stocks are still lower than elsewhere, Mobius said.

"Valuations are still not excessive. We're still able to find opportunities in the emerging market," he said.

Next year is shaping up similarly to 2006, which bodes well for international and emerging markets, as "we're beginning to get a situation where people feel they missed the boat" after the rise in prices this year, he said.

China-region, Latin American and European funds all have returned more than 30 percent so far this year, according to data from Lipper Inc., a unit of Reuters Group Plc.

Investors also want to diversify their portfolios and hope to obtain higher returns than in the United States, Mobius said. A weak dollar also is pushing money abroad.  Continued...