(Reuters) Veteran investor Mark Mobius warned that market volatility and the next move by central banks need to be “very carefully” monitored, and the “crazy move” of assets such as Bitcoin is “confused. He said it was caused by “confusion.”
Market speculation about when central banks, especially the Federal Reserve Board of Governors (FRB), will begin to curtail asset purchases due to early recovery from the pandemic of the new coronavirus and concerns about inflation is here. It has been widespread for several months.
Mark Mobius, co-founder of Mobius Capital Partners, told CNBC that central bank movements need to be watched closely.
Mobius told CNBC’s Squawk Box Europe, “I think the shrinking money supply as a result of the withdrawal of the central bank would be very bad for the market, so I think we need to watch this very carefully. “.
“We are in a very uncertain time, which is certain,” he added.
Even without concerns about central banks, there have been examples of extreme market volatility since the beginning of the year, and the retail frenzy that struck the US stock market in the spring, driven primarily by Reddit, is the crypto market. , Especially led to the violent movement of Bitcoin. Cryptocurrency prices fell about 10% on Tuesday to about $ 32,000, down 50% from April’s highs..
Mobius believed that risk-taking behavior among investors and market volatility were the result of turmoil.
“Many people have the cash they want to do, but secondly, many are confused. The fact that they saw Bitcoin, which they trusted very much, is that It’s a lost way Down confuses people, “he said.
“That’s an interesting situation where they have a lot of money in their pockets, causing confusion and disorientation. I think that’s what’s causing many of these crazy moves in the market.”
Nevertheless, Mobius believed that the market would still rise if the central bank did not unplug the asset purchase program too soon.
“There’s no reason why the market can’t rise in the midst of a lot of money. Not only the US market, but also the MSCI and EM (emerging market) markets are actually higher than the S & P 500. Money supply doesn’t shrink significantly We need to keep an eye on the movements of central banks around the world, especially the FRB, to continue as long as possible. “
Mobius pointed out how some emerging markets were doing well thanks to the rise in the global money supply, and some currencies such as the Chinese yuan and the Brazilian real were particularly strong last year. He pointed out that the outlook was unpredictable even between currencies.
“Many of these anomalous movements will be seen,” he said, “some of them can be justified, but many cannot be justified and are actually logical."
“That is, after all, we are in a very, very uncertain situation … and, of course, that means a recipe for disaster for some who are investing,” he said.
The Federal Reserve Board (FRB) has so far argued that rising price pressures are temporary as the economy continues to recover from the recession caused by the pandemic.