KUALA LUMPUR: The outlook for emerging markets remains positive to their relatively strong fundamental characteristics and faster growth than their developed counterparts, says Mark Mobius.

“In the face of the global economic slowdown, the major markets of China and India continue to record exceptionally robust growth rates. China and India are expected to grow by 8% and 6%, respectively, in 2009,” he said.

Emerging economies are in a much stronger position to weather external shocks following the accumulation of foreign exchange reserves.

The growing middle class in emerging markets is an important and strong contributor to growth, he added. Emerging markets account for more than 80% of the world’s population, providing them with a strong purchasing power and the ability to spend their way into growth. At the forefront are markets such as China, India and Brazil.

Another area that is poised to support economic growth in emerging markets is investment, particularly in infrastructure.

“This is another area in which we have seen governments boost public spending in markets such as China and India. More importantly, the current valuations of emerging markets remain attractive,” he said.

In his assessment of the second quarter of 2009, he said emerging markets surged with the MSCI Emerging Markets index returning 34.8% in US dollar terms.

Mobius said part of this return was due to weakness in the US dollar. A return of confidence in emerging markets, the desire for higher returns and the search for undervalued companies support the markets’ uptrend.

Latin American and Eastern European markets were among the strongest performers during the quarter while most Asian markets also recorded strong double-digit returns.

A rebound in commodity prices and stronger domestic currencies supported markets in Latin America. Asian markets continued to attract significant portfolio inflows allowing markets such as China, India and Thailand to outperform their regional counterparts.

Turkey was among the top emerging market performers with a return of 57.2% in US dollar terms. A stronger Rand led the South African market to end the three-month period with a 31.3% gain in US dollar terms.