Russia’s invasion of Ukraine upset the world markets. The crisis started to make itself felt especially in energy prices. So what is expected in the next process? Mark Mobius, a reference name for world financial markets, answered NTV’s questions about the Ukraine Crisis.
International Finance Investor Mark Mobius commented on the possible energy crisis and risk processes at the global level. Mobius commented, “The Ukraine Crisis will cause countries like Turkey to come to the fore in terms of investment value.”
NTV Foreign News Director Ahmet Yesiltepe spoke with Mobius.
How do you evaluate the current Ukraine crisis? What effect do you think this development will have on the world financial markets in the short and medium-term? How do you evaluate the Russia-Ukraine conflict?
First of all, Turkey took a very good stance by joining European countries in condemning Russia’s invasion of Ukraine. This is an important and right move for Turkey. Secondly, in some ways, the situation in Ukraine can be characterized as Russia’s new Afghanistan. In many ways, it could be a case of Russia being drawn into a prolonged guerrilla war. This would greatly weaken Russia’s position. Many people and governments in the West are in favor of this happening. Thus, Putin’s power in the region will also decrease. Of course, many are worried about rising oil prices. I don’t think oil prices will increase as there are many alternatives to Russia.
In addition, alternative energy sources are also available. By increasing the oil supply, Saudi Arabia can drive prices down or keep them stable. The USA also has the capacity to increase oil production to a large extent. The same is true for natural gas. So I’m not too worried about these issues. Of course, we are in an inflationary environment. And all prices will go up, but I don’t think energy will be a big problem.
“WE CAN MAKE MORE PURCHASES FROM TURKEY”
It is clear that the countries that will suffer the most from the war are Russia and Ukraine… At least financially. So how will the countries that trade with these countries be affected?
It should be noted that in any scenario like this, there will be winners and losers. For example, Ukraine is an important wheat producer. But this year, good crops will not be obtained. This situation will benefit other wheat exporting countries such as Australia. They will be in a better position. In this context, we can say that some countries will benefit more than others.
At the moment, Eastern European countries around Russia are also facing problems. It is feared that if Russia achieves its goal in Ukraine, it will further increase its power in the region. These countries will also face negativities such as the departure of investors. However, our assessment is that Russia will not be successful. For this reason, we will protect our investments in the countries of the region. As you know, we also have investments in Turkey and we do not intend to let them go. We can also make more purchases as prices drop. Therefore, Turkey’s position does not worry us.
We will come back to Turkey… What do you think; How will Russia’s investment partners be affected by this process?
Because of its aggression in Ukraine, I don’t think Russia’s other partners will be doing very well either. Anyone with a Russian connection is now condemned by the international community. And that’s a big problem.
WHAT WILL THE RUSSIAN OLIGARCHS DO?
Where do you think Russian oligarchs, those who invest in Western markets, will direct their money?
A very interesting question. I was talking to a real estate agent here in Dubai, he said that many Russian citizens who wanted to buy property in Dubai contacted him. All oligarchs who have money outside of Russia will want to buy real estate or property from abroad. However, many of the money transfer routes are blocked for these people. They will not have a chance to make money out of Switzerland or similar places.
The big investment instruments in the West, especially the stock markets, as well as the growing markets, were adversely affected by the pandemic. Now we are experiencing the Ukraine crisis. What do you think, to which countries and what kind of investment instruments will the hot money flow in the world in the next period?
First of all, we foresee that the US market will continue to be an investor’s paradise. Asian countries will also be attractive to investors who want to move away from Europe. Especially countries like Taiwan, Korea, Vietnam and China. Many companies in China can be attractive. Latin American countries such as Brazil can also become centers of attraction. The situation depends on companies, but markets far from Europe will attract investors.
TURKEY CAN ATTRACT INVESTMENTS FROM RUSSIA
When we look at Mr. Mobius’ investment areas, where do you see problems and where do you find investment opportunities? As you know, the relations between Turkey and Russia did not break the bridges in mutual trade even in the most difficult times; especially in the fields of energy and tourism. Among the growing markets, do you think Turkey will take an opportunity out of this crisis? Could it become more attractive to investors?
I believe that Turkey will maintain its attractiveness and increase it even more. Russia’s opportunities are closed for investors. It has become impossible to invest in Russia now, Turkey and other growing markets will attract all this investment. In addition, it should not be forgotten that with the relaxation of pandemic measures, many tourists in the world have the opportunity to travel abroad. I think this year Turkey will benefit more from the tourism flow from the world. Especially from here, from the Middle East. Personally, I came to Turkey from Dubai 2 months ago and I plan to do this more often.
I DON’T THINK OIL PRICES WILL RISE
Do you think oil prices will increase further? Is the energy crisis at our doorstep?
I don’t think oil prices will skyrocket. I envision a dramatic rise because there are many alternatives. Do not forget that when the price of oil per barrel exceeds $100, alternative energy sources such as wind and solar energy become very attractive. I think that the price increase will be at a moderate level and will remain at the level of inflation. Inflation in dollar terms is around 7-8% annually. A similar increase can be expected in oil.
How do you think the world natural gas market will be affected by this process when the pandemic and the Ukraine war come together? Russia is a large natural gas producer. Russia has very important partners in Europe, especially Germany. Do you think Russia will cut off the natural gas flow? How should Europe prepare for the energy crisis?
The problem is not that Russia shuts the valves. The real problem is how to make the payment. Because all these payment mechanisms are closed. Germany’s steps show that they are prepared to be deprived of Russian gas. There are many alternatives for natural gas, including the Middle East. Qatar gas exporter. Among the major exporters in the USA. There will also be natural gas alternatives to Russia. I think Europe will manage, albeit with difficulty. I say with difficulty because up to now there has been a huge dependence on Russian oil and gas.
I would like to take your advice. When you look at the sectors that create employment, how right do you think it is to invest in the real sector? Which production lines do you think stand out in this field? What are your top investment destinations in emerging markets at the moment?
Technology-connected destinations stand out for top-notch investments. Companies that produce high-tech and electronic devices, semiconductors and develop software attract great attention from investors. As you know, we have a software company investment in Turkey. In addition, companies that use technology directly, even if they do not produce technology directly, are also attractive. For example, companies that produce jeans are now using more and more technology every day. Technology is becoming increasingly important not only in production but also in distribution and inventory tracking. We are closely interested in companies that use technological tools effectively, whether retail, manufacturing or directly electronic.
My last question will be about cryptocurrencies. I would like to get your opinions on virtual currencies. What do you think, how will cryptocurrencies affect the world financial system? What do you think these effects are, positive or negative?
Currently, Russians will want to buy cryptocurrencies. Because this is a way to get money out of Russia. This is one of the reasons for the increase in Bitcoin prices. However, in the long run, I think cryptocurrencies will disappear over time. Because they are basically based on the “ponzi” logic, where prices increase with the number of buyers. In other words, in order for cryptocurrencies to maintain their value, the number of investors must constantly increase. I don’t believe this will happen. In the long run, cryptocurrencies will be deleted. But this does not mean that digital currency will disappear. Currently, digital currency is used. I can even pay with my mobile phone. This is also a digital form of payment. But I don’t think cryptocurrencies have a bright future.
Source: NTV / Translated by Irem Yildiz