LONDON, Oct 6 (Reuters) - The current setback in emerging markets offers a “multi-decade” opportunity to buy undervalued assets, Franklin Templeton’s star bond investor Michael Hasenstab said on Tuesday.
Hasenstab, CIO, Templeton Global Macro said he was currently buying beaten down currencies such as Mexican peso, 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 its been in history of Mexico...On a valuation level this is a multi-decade opportunity to buy very cheap assets,” Hasenstab said in a video interview posted on the company’s Youtube page.
He also said he was short U.S. Treasuries to position for a higher interest rate environment and that the U.S. yield curve was currently underpricing inflation.
“While for the last thirty years, (you) wanted to make money by declining rates, we think over the next five years you want to make money by rising rates. So the strategy is to position short U.S. treasuries in terms of negative duration,” he said.
“Short Treasuries will pay off when the Fed starts to hike interest rates... they have been slow and potentially getting behind the curve,” Hasenstab added.
Reporting by Sujata Rao and Karin Strohecker