Emerging markets fund manager and founder of Mobius Capital Partners LLP, Mark Mobius, on Saturday said internal and external factors are behind India’s slowdown after country’s economic growth slumped for the fifth straight quarter to an over six-year low of 5 percent in the three months ended June.
Talking about his latest book, Invest For Good, A Healthier World and A Wealthier You, Mobius said more and more people are putting money into passive funds; exchange-traded funds (ETFs) etc, and active investors are fighting against the tide. The book is co-authored by Carlos von Hardenberg and Greg Konieczny.
“However, more and more people are beginning to realise that it is necessary to have active engagement with companies and the only way you can do it is by having active investment managers,” he added.
Mobius said, “Studies have shown, as we indicated in the book, companies that have good ESG credentials (ESG stands for Environmental, Social & Governance) perform better and our emphasis is going to be to try to get companies to change their behaviour so that they become good ESG companies.”
“Therefore, we feel that the first step is governance; unless you have good governance, unless you have management who are aware of what’s happening around them in the society, in the environment then you are not going to have any change – that’s the whole emphasis of our investment criteria,” he said.
Speaking further about the book, he said, “From the very beginning when we started in 1987, looking at emerging markets companies, we were unconsciously aware of ESG because it’s a risk control situation. If a company is polluting the environment in any country, they are going to get into trouble. So, we were aware but it was not coined ESG; the term was no formulated at that time but we already were doing that in our research.”
On India front, he said, “An interesting thing about the country is that more and more companies are becoming aware of ESG as they realised in the past that it hurt their profitability and they are standing in the community by not adhering the good ESG standards.”
“There is no question in my mind that from a long-term perspective India will continue to grow at a good pace. Yes, there is a hiccup now and that’s mainly because a lot of the reforms have not been moving fast enough and there was a lot of confusion regarding taxation,” he further added.
“Therefore, when we talk about governance; we are not only talking about corporate governance but we are also talking about state governance, government governance. The government has to apply consistent policies that would be acceptable to the society and will help the society grow and that’s going to be happening with the Modi revolution that you are seeing here in India,” said Mobius.
“India’s growth can be corrected in a year or two with new policies coming in, new infrastructure spending by the government and most importantly a clarity on taxation and this is the biggest concern that I have been hearing among businessmen both domestically and internationally. Let’s make it clear and consistent so that not many-many changes come along the way,” he added.
According to him, rolling back surcharge levied on foreign portfolio investors (FPIs) was a very good move and he is happy to see India focusing on water resources and preservation.