They call him the guru, and he's managing about $40 billion.

PHILLIP LASKER, PRESENTER: They call him the guru, and he's managing about $40 billion. Dr Mark Mobius is the Executive Chairman of Templeton Asset Management and a specialist on emerging markets.

Those who know him won't be surprised to learn that the financial crisis hasn't dulled his enthusiasm for developing economies.

I spoke to Dr Mobius a short time ago.

Mark Mobius, thanks for joining "Lateline Business".

Well the US and European banks are suffering difficulties now because of the credit crisis, but could it be the emerging economies that suffer after the dust settles?

DR MARK MOBIUS, TEMPLETON ASSET MANAGEMENT: Yes, it is a problem because they will be contagen taking place from the developed countries, the US and Europe to the emerging markets, particularly those that are having a lot of trade with the US and Europe. Both in terms of exports and imports. It's going to run both ways.

I never believed in the decoupling theory, I believe that everything is coupled in this day and age. We are coupled by communication, we are coupled by communication, we are coupled by trade, we are coupled by politics, so there will be an impact.

But the impact is not going to be as severe as it would have been 10, 15, 20 years ago.

PHILLIP LASKER: So how's it going to play out, what do you think is going to happen?

DR MARK MOBIUS: First of all the governments around the world are beginning to raise interest rates in emerging markets in order to combat inflation.

However, they are very, very careful to make measures that will not smother their fast growth. They need fast growth, obviously, because they want to increase per capita income otherwise they'll run into political problems.

So you have countries like China and India taking more specific measures, rather than raising interest rates wholesale, or restricting bank credit wholesale, they are saying, "OK, we will restrict bank credit for housing for example for a temporary period", or, "we may restrict government programs that encourage certain industries in favour of something else", so that is what I think you're going to see going forward.

PHILLIP LASKER: Do you think that approach is going to work?

DR MARK MOBIUS: I think if commodity prices continue to stabilise and decline, yes, that will work. However, if commodity prices continue moving up, then it's a problem. Because then they would be faced with higher inflation, and really there's no choice but to do something like raise interest rates and restrict credit in a more aggressive way.

PHILLIP LASKER: You have always considered emerging market as great places to make money, how do you see them now against the backdrop of this financial crisis?

DR MARK MOBIUS: Well, first of all with emerging markets you're going to probably see a lot more political upheaval. Why? Because the so-called misery index is moving up.

If you add inflation plus unemployment, that is misery for some countries, and that means more political disturbances. We are seeing it now in Thailand, we have seen it in Pakistan, and you will see that more and more as we go into this.

At the same time the trend towards more democratically elected governments, the trend towards better communication, means that these disturbances will be solved. They will not erupt into major revolutions, let's say, that you would have had, let's say, when there was a communist nation in power, where they weren't listening to what people were saying.

So I think that from a longer point of view, even a medium term point of view, stability is going to be pretty good. There's no reason for us for example to move out of Thailand just because people are at the gates of the Prime Minister's office, and tearing down those gates. No reason to move out of Turkey, because the AK party is pushing a more Islamist role for government. We think that the stability will still be there.

PHILLIP LASKER: So emerging markets are a great place to make money right now?

DR MARK MOBIUS: I think so, particularly now, because prices have come down. We are in a bear mark, in emerging markets. Overall, emerging markets are down more than 20 per cent. So we are finding terrific opportunities, bargains, companies that are selling at far below what their fair value should be.

PHILLIP LASKER: Mark Mobius, thanks very much for joining Lateline Business.

DR MARK MOBIUS: Thank you very much