Faber urges gold in portfolios
Investors should diversify their investment portfolios and prepare themselves for market volatility due to expansionary monetary policies by global central banks and a possible economic crisis in China, says investment guru Marc Faber.
Mr Faber, speaking at an investment forum in Bangkok yesterday, said China could possibly see growth slow to just 4% this year, a far cry from estimates by most analysts. The Asian Development Bank earlier this week cut its own 2012 growth forecast for China to just 7.7% from 8.5% earlier.
But Mr Faber said China is currently facing both a credit and property bubble and that based on recent export figures, growth in the world's second-largest economy will likely be much lower than official figures.
Expansionary monetary policy has been the main factor spurring commodity prices and supporting demand in China, which ultimately could be unsustainable. Mr Faber noted that higher consumption in China has exposed weaknesses in the country's energy security, as 95% of the country's oil comes from the Middle East.
He suggested investors hold gold in their asset portfolios and said he favours Asian assets thanks to the relatively healthier fiscal positions of economies in the region compared with the US and Europe.
Thai equities, while not cheap based on historical valuations, still offer interest for investors, given potential returns of 5% for selected stocks.