Reuters
Sep 15, 2010
Source(Reuters) - Contrarian investor Marc Faber says he is investing a large chunk of his money in Asia's developing economies to counteract the effects of a loss of purchasing power in the United States and Europe.
On the sidelines of the Invest10 investment forum in Geneva, the editor of the Gloom, Boom & Doom Report told Reuters in an interview on Wednesday that ultra-low interest rates were making it difficult to value assets in developed economies, and that countries like Thailand, Singapore and Vietnam would do better short term.
"U.S. and European interest rates are negative in real terms, the rate of inflation is significantly higher than what governments are saying," Faber said.
"You can see it when you pay for your insurance premiums, your groceries, your child's pre-kindergarten schooling in New York there has been a loss of pricing power for most people."
The U.S. real estate market is extremely fragmented, however, and while investors remain cautious about buying there are likely to be some good buying opportunities, he said.
Burgeoning debts had pushed major economies into a corner at a time when competition for scarce resources like industrial commodities and water was already creating tensions, Faber said, adding governments could have to print money to keep their debts manageable.
Although more bullish on eastern economies, Faber said he is not adding to investments in China at present and advised investors looking for exposure to China to open positions in Australian dollars and in commodities.
He was particularly wary of Chinese stocks and said Indian companies were more attractive and easier to evaluate.
"No matter what people tell me, nobody has a clue about company accounting in China. It is further complicated by so much inter-company lending," he said.
(Editing by Greg Mahlich)