Dr. Marc Faber Is Very Bearish On Global Economy And Thinks Malaysia Stocks Will Go Down And China Stocks Could Go Down More!

Published on Bloomberg News, Faber Says Malaysian Stocks May Fall as Sentiment Is Negative

• By Chua Kong Ho
  
  July 7 (Bloomberg) -- Marc Faber, founder and managing director of Marc Faber Ltd. in Hong Kong and publisher of the Gloom, Boom & Doom Report, comments on the outlook for Malaysian stocks.
  
  As many as 15,000 people gathered outside the Malaysian capital city of Kuala Lumpur yesterday to protest last month's increase in fuel prices in a rally led by opposition leader Anwar Ibrahim. Anwar has said he would be able to put together enough lawmakers to topple the government by September.
  
  The Kuala Lumpur Composite Index has fallen 21 percent this year.
  
  ``You can argue that Malaysian equities are relatively inexpensive compared to bond yields and money market rates, but I own some Malaysian shares and I think they'll go down. I don't think they'll go up.''
  
  ``By and large sentiment will be negative in Malaysia. I'm very bearish about the global economy and I think that the recession that is coming will be very vicious and knock down a lot of share prices and property prices.''

And Dr. Faber reckons that the worse is not over for Chinese Stocks! China Bulls Wrong; Stock Rout to Worsen, Says Faber

• China Bulls Wrong; Stock Rout to Worsen, Says Faber
  
  July 7 (Bloomberg) -- Investors betting on a rebound in China's tumbling stocks are setting themselves up for more losses, according to Marc Faber, who told investors to bail out of U.S. stocks before 1987's so-called Black Monday crash and correctly predicted last August the U.S. would enter a bear market.
  
  Faber's forecast contrasts with local stock analysts, who are as bullish as ever even after a 51 percent plunge in the CSI 300 Index since its October record. ``Buy'' calls still make up two-thirds of all recommendations for Chinese stocks, virtually unchanged from the market's peak, according to Bloomberg data.
  
  ``I just wouldn't buy,'' Faber said in an interview from Bangkok July 4. ``When a bubble bursts, you only hit bottom when people totally give up and vow they'll never buy stocks again. People are still more worried they'll miss the next rally.''
  
  China's rout has wiped out more than $2 trillion in market value after the government raised interest rates six times last year to cool the economy and commodities prices surged, fanning inflation. The CSI 300 more than doubled in 2006 and 2007, making its shares the world's priciest and prompting the government, Alan Greenspan, Warren Buffett, and Faber, to warn of a bubble.
  
  Investor Confidence
  
  The last time Chinese stocks fell by half -- from a June 2001 high -- the Shanghai Composite Index took four years to reach its low. More than 60 percent of China's retail investors are ``confident'' about the performance of the nation's stock market in the next two years, the Shanghai Securities News reported July 4, citing a survey it conducted with StockStar.com, a provider of financial data via the Web.
  
  The declines sent valuations for stocks on the CSI 300 Index to their lowest in more than two years last week, with the benchmark trading at 19.9 times reported earnings, a level last seen in April 2006. Liu Yang, managing director at Atlantis Investment Management Ltd., which oversees about $4 billion in assets, expects a rebound.
  
  ``Fundamentals are very strong in China compared to any other Asian nation,'' said Hong Kong-based Liu. ``Chinese stocks are trading at crisis valuations. Do they deserve to trade at crisis valuations? The answer is no. The market deserves a very good rebound from here.''
  
  The CSI 300 Index rose as 5.1 percent today, the most in more than two weeks.
  
  Record Oil
  
  China, the world's fastest-growing major economy, grew 10.6 percent in the first quarter. That's the ninth straight quarter growth has exceeded 10 percent. Record oil prices have eroded earnings, with Chinese industrial companies increasing profits at half the pace in the first five months compared to a year earlier, official data show. Inflation was 8.1 percent in the first five months, the fastest pace since 1996.
  
  Faber, publisher of the Gloom, Boom & Doom Report, also said Chinese shares could bounce off lows, though only temporarily.
  
  ``We could have rebounds of 20 to 30 percent, but I wouldn't bet on it,'' Faber said. ``I would rather use rebounds as a selling opportunity.''
  
  Japan's Nikkei 225 Stock Average plunged 60 percent in two and a half years from its December 1989 high; today it's slightly more than a third its peak of 19 years ago. The Nasdaq Composite Index plunged 78 percent in 31 months from its March 2000 record.
  
  ``Like the Nasdaq when the bubble burst in 2000, it rebounded but we're still 50 percent lower today than we were in 2000,'' said Faber. ``This is eight years later.''