Sat, Nov 25, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Asia Pacific Intelligence

Marc Faber: investors were too optimistic about Asia

Thursday, September 05, 2013

Benedicte Gravrand, Opalesque Geneva:

Last week (third week in August) was a turbulent week in some Asian countries as the sell-off intensified. And this turbulence is set to continue, says Marc Faber.

Marc Faber

Indeed, investors have been exiting the Indian and Indonesian currencies following months of decline and a sharp drop last Thursday. The currencies of Malaysia, the Philippines and Thailand also declined, although by less than 1%, says the New York Times. Stock markets across most of the region fell on Thursday, but share prices rebounded slightly in India. However, China and Japan's were unaffected by this general waning.

The Indian rupee fell to a fresh record low against the U.S. dollar (breaching the key level of 66.00 to the dollar) on August 27th, causing a selloff in local stocks, reported the Wall Street Journal. And emerging-market stocks posted the biggest drop in eight weeks on concern a conflict between the U.S. and Syria will intensify (the MSCI Emerging Markets slid by 1.8% on August 27th, said Bloomberg).

"The countries most affected when investors flee emerging markets are those that rely on the fickle inflow of investment to balance out longstanding deficits in trades and services," said Stratfor, a geo-political intelligence firm, on Friday. These include Turkey (the Turkish lira weakened to 2.0051 against the dollar on Aug. 27), India and Indonesia among others.

Investors too optimistic

Marc Faber, the Swiss-born and Thailand-based investment guru noted, according to Swiss paper Le Temps, that investors had been too optimistic about Thailand, the Philippines and Indonesia, and that they now realise that growth is slowing down. Which is why stocks were being sold off last week and currencies were under pressure.

Faber, who also edits the monthly Gloom, Boom & Doom Report, stated that a fundamental change occurred in those countries in the last few years; they started showing current account deficits. He thinks that those economies were stimulated artificially with credit expansion. "There were excesses, although not like in 1997," he added (in South-East Asia, the current slide in currencies is triggering deep concerns of a repeat of the 1997 crisis). Moreover, these economies also depend on China for their raw material exports. China is itself slowing down, and it is doing so more than the official figures tell you, he said.

He is also sceptical about the outlooks coming from large foreign banks implemented in those countries, for they not entirely disinterested. Besides, he added, export figures from various countries don't match. As for India, which saw its currency fall, and its central bank announcing a plan to buy 80 billion rupees' worth of government bonds, Faber believes this kind of support may not work, and that India should hike up its interest rates instead to around 12-13%.

In the current context, he does not recommend investing in the Asia stock markets.

The previous week, Faber claimed that stocks were in "bubble territory", making it a good time to move into gold.

"I have a preference for physical gold, held in a safe deposit box outside the United States, and preferably in Asia, for a variety of reasons," he was quoted as saying by CNBC.

This piece first appeared in Opalesque August 28th.

 
This article was published in Opalesque's Asia Pacific Intelligence our monthly research update on alternative investments in the Asia-Pacific region.
Asia Pacific Intelligence
Asia Pacific Intelligence
Asia Pacific Intelligence
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Tourbillon Capital, a $3.4bn hedge fund that's been sounding the alarm about 'frothy speculation,' is suffering big losses[more]

    From Businessinsider.com: Tourbillon Capital, a $3.4 billion hedge fund firm led by Jason Karp, is suffering. The firm's flagship Global Master fund is down 3.5% for the first 17 days of November, bringing performance for the year to November 17 to a loss of 10.6%, according to a note to investors s

  2. Fund Profile - The Tiger of Silicon Valley: Glen Kacher's sizzling hedge fund[more]

    From Forbes.com: When you live and work in a town where the median home costs $2.7 million and hobnob with the executives of billionaire factories like Facebook and Tesla, it's easy to see why you might think technology stocks are invincible. So far in 2017, the Nasdaq Composite index has gained 25%

  3. Launches - Asset manager launches Europe's first bitcoin mutual fund, Prime Capital Aviation Debt Fund enables aviation debt investments for institutional investors[more]

    Asset manager launches Europe's first bitcoin mutual fund From Coindesk.com: A French asset manager has announced the launch of Europe's first mutual fund centered around bitcoin. Announced today, Tobam's alternative investment fund perhaps represents the latest bid to attract institutio

  4. Legal - Consumers say hedge fund financed illegal tribal lending, New York's highest court permits shareholder of a Cayman-incorporated company to bypass Cayman law and bring derivative action in New York[more]

    Consumers say hedge fund financed illegal tribal lending From Law360.com: Vermont residents on Tuesday hit a hedge fund with a proposed class action in federal court alleging it helped concoct a sham tribal payday lending scheme meant to skirt laws preventing companies from charging cons

  5. Investing - Tech still hedge funds' sweetheart sector: Goldman Sachs, Hedge funds haven't been this leveraged to buy stocks since the bull market began, Top financials hedge fund details short bet against Morningstar, Fund CRC presents an offer for Carige's consumer credit unit, Hedge funds sell shares in Altice USA after difficult quarter[more]

    Tech still hedge funds' sweetheart sector: Goldman Sachs From Reuters.com: Tech stocks remain the largest net sector exposure for equity hedge funds, which are set to deliver their strongest returns since 2013, Goldman Sachs said on Wednesday in a note on the industry's most and l