Since bottoming at the end of October, the MSCI Emerging Market Index (MXEA) and MSCI Asia Ex-Japan ...
Heading South With the Dollar
10/19/2009 9:42 am EST
Dr. Marc Faber of The Gloom Boom & Doom Report likes Singaporean and Thai property plays as the greenback cheapens.
Aside from brief recovery phases, we should assume that the US dollar will continue to lose its purchasing power over the next five to ten years, and probably at an accelerating rate. Other paper currencies are likely to be in the same boat and will also lose some of their purchasing power. However, Asian currencies are likely to lose their purchasing power at a slower rate than the US dollar and, therefore, I still regard the Singapore dollar as one of the most desirable currencies.
In order to gain exposure to Singapore, I continue to recommend the gradual accumulation of Singapore Real Estate Investment Trusts (REITs), such as Ascendas REIT (Singapore: AREIT), Ascott REIT (Singapore: ART), First REIT (Singapore: FIRT), Suntec REIT (Singapore: SUN), CapitaCommercial Trust (Singapore: CCT), and ARA REIT (Singapore: ARA). I also own Hyflux Water Trust (Singapore: HYFT) and a number of other Singapore shares with relatively high dividends.
…Any meaningful correction in equity prices will be met by further money printing and support prices. But it should be clear that while these policy measures can support equities and even drive them higher, they undermine the value of the US dollar! So far, the equation “strong stocks = weak dollar” is still intact and can be observed every day in the marketplace.
My preference is to invest in Asia, and I still find good value in Thailand, where many companies have dividend yields of more than 6%. With strength in the euro, the Japanese yen, and the Australian dollar, Thailand’s tourist sector has good recovery potential, which should benefit Thai International (Bangkok: THAI). I have also invested in or increased my positions in Thai Beverage (Singapore: THBEV), DSG International (Bangkok: DSGT), Quality House Property Fund (Bangkok: QHPFTB), Bangkok Aviation Fuel Services (Bangkok: BAFS), Golden Land (Bangkok: GOLD), TIPCO Food (Bangkok: TIPCO), and Home Product Center (Bangkok: HMPRO).
All over the world, many stocks are breaking out on the up side, with heavy volume from bottom formations. Whether we believe in an economic recovery or not, we have to respect such broadening of the advance in equities and regard upside breakout moves of stocks with very heavy volume as positive from a technical point of view. This doesn’t alter my view that markets (stocks and commodities, and precious metals) have become overbought and that a correction could get under way at any time. But I would use any weakness to increase my positions in equities.
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