Mark Mobius, a market expert and founder of Mobius Capital Partners, has warned investors against doing business with China and recommended India and Brazil as more transparent alternatives. Speaking to FOX Business, Mobius claimed that his HSBC account in Shanghai has had investment outflows "restricted" by the Chinese government, and he cautioned against investing in China as its economy is headed "in a completely different direction" than its former open-minded-market revolutionary leader Deng Xiaoping.
Mobius cited the Chinese government's increasing control over companies in the country as a concerning development for investors. "Now you have a government which is taking gold in shares in companies all over China. That means they're going to try to control all these companies. So I don't think it's a very good picture when you see the government becoming more and more control oriented in the economy," Mobius said.
In contrast, Mobius said that Hong Kong "seems to be a little more open," and he had no trouble getting his money "in and out" of the financial center. He recommended India as a viable alternative with the most economic opportunity, citing the country's population of one billion people who can perform the same tasks as the Chinese.
"You've got a billion people, they can do the same thing that the Chinese do. They can do the same kind of manufacturing and so forth," Mobius said.
Regarding Brazil, Mobius suggested that investors take into account the fact that it is more welcoming than China. "I'm now in Brazil, and Brazil, you've got 250 million-plus people. Very good people, open society. Hey, why not come here? It's another alternative," Mobius said.
These comments come just days after the American Chamber of Commerce in China cited survey results indicating that US businesses operating in China are increasingly pessimistic about their prospects in the world's second-largest economy. The warning from Mobius echoes concerns raised by other market experts in recent months about China's tightening grip on its economy and increasing regulatory scrutiny.
Mobius had previously spoken about the potential for investors to profit from India's growth trajectory in an interview with Moneycontrol. He cited the country's superior growth rate compared to most countries around the world, as well as the positive impact from the shift from China to India in terms of software and production, supported by the massive technology change.