Sun, Jun 26, 2016
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. Opalesque Roundup: Hedge funds shrink as liquidations outpace new launches in Q1: hedge fund news, week 27[more]

    In the week ending 17 May, 2016, HFR said hedge fund liquidations declined narrowly to begin 2016 after rising sharply to conclude 2015, as investors positioned f

  2. Europe - Hedge funds keep powder dry over big Brexit bets, Hedge funds sense profit in Europe shock waves after Brexit vote, Soros warns Brexit may cause pound plunge worse than Black Wednesday, After Brexit: What will happen if Britain votes to leave the UK?[more]

    Hedge funds keep powder dry over big Brexit bets From FT.com: Hedge funds are shying away from big bets on Brexit, with many unwilling to risk further losses having already suffered a painful first half of the year. With the outcome of a UK vote on the country’s membership of the Europea

  3. News Briefs - ’Flash Boys’ get green light to launch stock exchange, Pimco says ‘storm is brewing’ in U.S. commercial real estate, Bankers get ready to rumble at Hedge Fund Fight Night, AIMA Australia celebrates 15th anniversary[more]

    ’Flash Boys’ get green light to launch stock exchange In an investing environment ruled by fast, the newest U.S. public stock exchange is banking on slow. Well, slower. IEX Group, which won Securities and Exchange Commission approval on Friday to go head-to-head with the New York Stock E

  4. Blackstone buys minority stake in New York-based credit hedge fund Marathon[more]

    Benedicte Gravrand, Opalesque Geneva: Blackstone Strategic Capital Holdings Fund, a vehicle managed by Blackstone Alternative Asset Management (BAAM), has acquired a passive, minority interest in Marathon Asset Management, for an undisclosed sum. Based in New York,

  5. Global markets fell, hedge funds gain in mid-June on Brexit, Fed rate concerns[more]

    Komfie Manalo, Opalesque Asia: Global financial markets declined through mid-June, as uncertainty associated with the upcoming Brexit referendum and expected U.S. Fed interest rate hike contributed to increases in volatility across asset classes, data provider