Cryptocurrencies were unlikely to go away any time soon despite attempts by governments to try and control their expansion, said Mark Mobius, executive chairman of Templeton Emerging Markets.
Also known as digital currencies, with the best known being bitcoin, they use distributed ledgers known as block chains to track transactions. There are now hundreds in existence, as the currencies' independence make them attractive to some users.
The rise of cryptocurrencies was taking place because they allow for a very fast and convenient means of borderless transaction, and where access to US dollars was not needed, Mobius said.
Governments would find it difficult to control virtual currencies because it would mean controlling the entire internet space. The operations of cryptocurrencies involve crossing national lines, using blockchain and the cloud, he said.
China said on Monday that it had banned the practice of initial coin offerings (ICOs) - fundraising by the issue of digital currencies outside the regulatory framework - and stepped up its policing of the trading of digital coins to ward off financial risks and potential social disunity.
"China's government has realised what other governments haven't, and that is the danger of cryptocurrencies being used by terrorists and by illegal operators," Mobius said.
In 2016, the Bangladesh central bank was targeted by hackers in an attempt to illegally transfer US$951 million to their Sri Lanka and Philippines accounts, highlighting the threat of cyberattacks to both government and private institutions by cyber criminals.
"This is very difficult to control because this is an international situation," Mobius said. "China is 'ahead of the game' in the sense that it is taking care to look into and control the operations of cryptocurrencies. Hong Kong and other countries will probably follow China's lead."
Meanwhile, Mobius said that investment opportunities had increased in the A-share market, as China gradually opens up the market to foreigners, and given that there are so many small and medium-sized start-ups that are in the businesses related to information technology, artificial intelligence, and in new hardware.
He is also optimistic of the Hong Kong's and China's stock markets, with recently reported Chinese company earnings to have exceeded estimates, which are seen to be sustainable because the government's state-owned enterprise reforms and tightening measures to cut down risky corporate debt would lead to healthier growth in the nation.
"There is a big reform movement going on as the government forces state-owned enterprises to become more efficient. This can only be good to the earnings of these companies," Mobius said.
Eric Mok, senior vice-president and portfolio manager of Templeton Emerging Markets added that there were also opportunities in the insurance sector and consumer discretionary sector, such as luxury products and automobiles.
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