Ace investor Mark Mobius on why NASDAQ will not do well in the near term

Mark Mobius, seasoned investor and founder of Mobius Capital, believes that the NASDAQ is most likely to underperform in the near term. In an exclusive exchange with Business Today, the investor explained his outlook on NASDAQ.

Mobius said, “ The NASDAQ probably will not do very well for some time.”

He reasoned that companies with high debt and low or no cash flows would be the reason for the stock exchange’s underperformance.

“Well there is no question within the NASDAQ, you have a mixture of companies. Some companies have very good cash flow and low to manageable debt. On the other hand, some companies that have high debt or no cash flow at all. The NASDAQ probably will not do very well because many of the companies in NASDAQ are in that latter category,” he explained.

He further added, “In other words, there are companies with big expansion plans but not much profitability coming in and really high debt, or at least a need for more and more cash to keep the operations going. So, a lot of these companies will throw by the wayside. And that's the reason why NASDAQ probably wouldn't perform well.”

The fund manager also shared his take on the pullback rally witnessed across the global equities space in the past few weeks despite grim macroeconomic cues.

“Well, it is all about money supply. As you know, the Fed in the US has been trying to pull back on money supply and they have been raising interest rates. But in the meantime, there's still an awful lot of money left out there. And one of the things that is happening is that people are finding that with higher interest rates, they can put their money to work on fixed deposit instruments, bonds, we're paying higher rates, and also this extra cash they get can be put into the stock market. So it's really sort of a respite from what's been happening with the money supply,” the seasoned fund manager noted.

Also Read: TCS, Infosys Wipro: How Credit Suisse, SVB collapse can impact Indian IT sector - BusinessToday

Also Read: AI is nothing new, TCS has been working on it since 1990, says COO N Ganapathy Subramaniam - BusinessToday