UPDATE 1-Templeton's Hasenstab sees "multi-decade opportunity" in EM; short Treasuries
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LONDON Oct 6 (Reuters) - Franklin Templeton's star bond investor Michael Hasenstab said on Tuesday he was buying select emerging markets such as Mexico, with the current selloff offering a "multi-decade" opportunity to buy undervalued assets.
Hasenstab, CIO for global macro at Templeton, said also that the U.S. Federal Reserve, which last month delayed raising interest rates, appeared be behind the curve, meaning it would pay to be positioned short in Treasuries.
Hasenstab who made a name for himself by buying markets shunned by others, said he was also buying some other beaten-down currencies such as Malaysian ringgit and Indonesian rupiah.
"We are buying select emerging markets at multi-decade or all-time low valuations. We are buying the Mexican peso at the weakest level it's been in history of Mexico ... On a valuation level, this is not a once in a decade, this is a multi-decade opportunity to buy very cheap assets," Hasenstab said in a video interview posted on the company's YouTube page.
Emerging markets are seeing a huge investor exodus, and according to the Institute of International Finance (IIF) 2015 will be the first year since 1988 that net capital flows to the developing world are negative.
As a result, emerging currencies have skidded to record lows, as in the case of the Mexican peso, while some others such as the Malaysian ringgit are at the lowest levels since the Asian crisis of 1998.
But by buying these assets, Hasenstab is sticking to his contrarian strategy of investing in selected markets that are being shunned by peers, a policy that paid off handsomely in Ireland and Hungary.
Many emerging currencies are 15-20 percent undervalued after their falls, Hasenstab said, adding: "We are quite excited about the return expectations there." Continuación...