TEMPLETON Asset Management Ltd expects bourses in emerging markets including Malaysia to regain their footing this year and eventually see the economy bounce back by 2010.

Its executive chairman Mark Mobius said there has been a very strong build-up of foreign reserves in these markets and the increase in money supply has been quite substantial.

"We expect to see the stock markets in emerging markets to recover this year. We have seen a big increase of money pouring into these markets," he said.

The veteran emerging markets fund manager, which oversees about US$30 billion (RM107 billion) in investments, said the positive outlook is backed by the rising income from two of Asia's economic power houses, China and India, and also other Asian countries, including Malaysia.

China now has US$1.9 trillion (RM6.8 trillion) in foreign reserves, Russia US$437 billion (RM1.6 trillion), South Korea US$200 billion (RM716 billion), Taiwan US$281 billion (RM1 trillion), India US$246 billion (RM880 billion) and Malaysia US$91.4 billion (RM327 billion).

To note, the MSCI Emerging Markets Index dropped 54 per cent in 2008, the worst performance since the measure was created in 1987 as global credit markets froze.

The index, however, gained 18 per cent since reaching a four- year low on October 27 2008 as governments worldwide unveiled spending plans to bolster economies, Mobius told reporters after speaking at the Citigold Wealth Management Leadership Series in Kuala Lumpur on Saturday.

Also present was Citibank Bhd retail banking head Paul Hodes.

Mobius said the two sectors which could help build up the economy in the current economic slump will be consumer products and commodities.

"Basic consumer goods will continue to sell and will continue to be profitable, especially in Asia where the people now have more money in their pockets," he said.

Although Mobius did not disclose specific consumer or commodity companies, he said Templeton, which is the asset management arm of Franklin Resources Inc, favours commodities like gold, iron ore, nickel, paladium and platinum.

As for food commodities, palm oil could be a possible pick but there were not many companies to choose from.

"Malaysia has a very big palm oil industry but even there, it is difficult to get a pure exposure. Companies like Sime Darby Bhd are diversified," he said, referring to the world's largest palm producer in terms of plantation assets.

Emerging markets should continue to record a higher economic growth compared to the developed countries.

Average economic growth in 2009 for emerging markets is expected to be 2.4 per cent compared to -1.6 per cent for developed countries, according to the Economist Intelligence Unit.

(c) 2009 New Straits Times. Provided by ProQuest LLC. All rights Reserved.

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