Emerging markets are attracting more money from initial public offerings than industrialized nations for the first time ever, a warning sign to Mark Mobius that the record rally in the shares may turn into a 20 percent decline.

Faster economic growth may help China, India and Brazil produce the biggest increases in IPOs and almost double sales to $200 billion worldwide, according to Matthew Johnson, the New York-based head of the global-equities syndicate at Barclays Plc. Poland alone may offer more than $10 billion of state-owned companies, according to estimates by UniCredit SpA.

Companies in the MSCI Emerging Markets Index trade at the highest levels relative to earnings since 2000 after the gauge surged 75 percent and IPOs in developing economies raised $77 billion. The 2009 sales exceeded industrialized nations by 160 percent, the first time developed countries attracted less money, annual Bloomberg data starting in 2000 show.

"When you look at the size of some of these IPOs, they're pretty massive," Mobius, 73, who oversees $34 billion of developing-nation assets at Templeton Asset Management Ltd., said in a telephone interview from Tokyo. "At the right price, the IPOs will be absorbed, but you're going to have some hiccups. It's too much supply coming out."

Investors snapped up new shares in developing nations as China led the recovery from the first global recession since World War II. The MSCI Emerging Markets Index of 22 countries rebounded from its worst annual performance to post the biggest gain since data began in 1988. The MSCI World Index of stocks in 23 industrialized economies climbed 27 percent in 2009.

Eoin Treacy's view Emerging markets remain leaders and relative performers in the current bull market which has been underway since October 2008. Considering the potential for capital markets to deepen in progressing economies over the coming years and the range of assets still held by respective governments, we can conclude that it could be a considerable period of time before the value of IPOs in developed economies exceeds that in emerging Asia and Latin America.

However, increased supply is a potential short to medium-term headwind we need to be wary of. The Chinese authorities have been using increased supply as a tool to contain bullish excesses and have succeeded in checking the market's advance over the last few months. To date IPOs have been absorbed with little difficulty in most markets and importantly, they are not selling for substantial premiums over the offering prices. This suggests that while the pace of IPOs is picking up we are closer to the beginning of this cycle of placements rather than the end. Nevertheless, there remains the potential that large increases in supply may take time to digest in some markets.