Mark Mobius, the boss of Templeton Emerging Markets Group, has urged market players to pull out of the US equity market and invest in better-performing emerging markets, warning that corporate earnings in world's top economy were likely to disappoint.
Mobius said that while there were still opportunities in the US market, such as those with a global focus, the case for shifting into emerging markets was growing stronger.
Mobius, who is bullish on several Asian markets including China, Indonesia, Thailand and Taiwan, added that the region was well-placed to weather any volatility stemming from the US Federal Reserve's impending interest rate hikes.
Fears of an equities sell-off in China have been growing after the securities regulator there issued a stern warning about the country's spiraling stock market, and tightened rules on margin lending.
But Mobius, speaking to CNBC on 21 April, said any corrections in the Chinese market should be seen as a buying opportunity, adding that the bull market was not ending any time soon.
Mobius told the news channel that US corporate earnings "will not be as good as people expect simply because they have a lot of headwinds".
The first reason, he said, was that the American recovery was still at a nascent stage. On top of this "government pressure on businesses has been very, very great under this administration."
"They hate the banks to begin with, so banks are not able to give business support that they really need. As a result, companies have been conserving cash and buying back shares. That doesn't do much for earnings, so expansion isn't really there except in the tech space."
He added that a "rate hike in the US is not going to have that much impact on the rest of the world because the rest of the world [is] expanding [its] monetary base", referring to the ECB and Bank of Japan (BoJ) that are providing global markets with liquidity through their stimulus programmes.
Betting on China
"I think the [Communist] Party's realised that [China's stock market is] becoming a little bit like a casino for some people, and they want to contain it. But they won't want to stop it, because part of their plan, I believe, is to put more money in the hands of the public.
"We're having corrections everyday as you know. The bottom line is this: we're in a bull market, so we must not forget that
"A correction of 20% is expected...take these corrections in stride, and take the opportunity to buy."