Mark Mobius says the bull market in Chinese stocks is just getting started and he’s using the biggest price swings in five years to boost holdings.

“We are buying more in China because we think this is the beginning of a longer-term bull run,” Mobius, who oversees about $40 billion as the executive chairman of Templeton Emerging Markets Group, said in a phone interview yesterday from Thailand.

The 78-year-old money manager, who’s been investing in emerging markets for more than four decades, is stepping up his wager on China after correctly predicting four months ago that the nation’s stock rally had further to run amid low valuations and government efforts to open-up state-dominated industries. The Shanghai Composite Index (SHCOMP)’s 51 percent jump from a four-year low in June 2013 is still less than half the average 122 percent gain during 26 bull markets since 1990.

China’s rally has accelerated during the past month as the central bank unexpectedly cut interest rates and mainland investors opened new stock accounts at the fastest pace in five years. While the Shanghai gauge posted its biggest one-day tumble since 2009 on Dec. 9, Mobius says increased volatility is creating opportunities to buy mispriced shares.

Mobius said he’s been buying Chinese stocks “across the board,” including oil-related companies, on expectations that crude prices will recover from five-year lows. Petro China Co., the nation’s biggest energy company, has climbed 21 percent in Shanghai trading during the past month.

David Fuller's view

One often sees a wide range of views in most markets, not least in today’s environment.  Nevertheless, Mark Mobius’ assessment of China makes sense to me.  

See also: Mark Mobius on Russia, Oil Stocks and Dangers for Long-Term Investors.

Mobius mentions that “longer-term predictions have oil at $90 or even $100 a barrel.”  Market speculation and a production scare could temporarily lift prices to those levels, but I do not think they could hold beyond the short to medium term.  Oil extraction technology will continue to improve; more countries will inevitably follow the US fracking lead; renewables will become more effective, and ‘new nuclear’ will gain favour, not least because of climate change concerns.