Mobius urges caution as trading gets pricey

Mark Mobius is convinced that China's push into technology, consumer and service industries will produce a more sustainable expansion in the world's second-largest economy. He is just not so sure it is going to work out for equity investors.

The executive chairman of Templeton Emerging Markets Group predicts China's "new economy" sectors will drive growth as the nation weans itself from a reliance on credit-fueled investment. The problem, Mobius says, is that many stock valuations have already reflected a successful transition.

The ChiNext Index - used by local traders as a proxy for new economy companies - is three times more expensive than the benchmark Shanghai Composite Index after surging 25 percent in the past month.