Veteran emerging markets investor Mark Mobius has warned of a worse-than-expected slowdown in Chinese steel production, highlighting the risks to the country's economy and the losses that could be felt in the sector.
Mobius said that while he is bullish on China's energy and metal consumption long-term, he recognised that demand may not meet "previous expectations" of various commodity-producing firms, which may have "overestimated demand growth from China and other parts of the world."
Mobius stepped back from the position of lead portfolio manager on the £1.5 billion ($2.27 billion) Templeton Emerging Market Investment Trust after over 25 years this summer, handing the reins to colleague Carlos Hardenberg. He remains a manager on the trust and leader of Templeton Emerging Market Group, an arm of U.S. asset manager, Franklin Templeton.
Performance of the trust has struggled in recent years, underperforming its "global emerging markets equities" benchmark over the past one, three and five years, but has comfortably out performed over 10 years, according to analytics firm FE Trustnet.
The slowdown in China's growth has helped push metal and commodity prices to multi-year lows, with the price of iron - a core steelmaking component - tumbling to its lowest level in around seven years this week.
Given China's huge role in the iron ore market, the global benchmark price of iron ore is based on the price on delivery at Chinese ports.
Source: http://www.cnbc.com/