SINGAPORE: Corporate earnings may be the next casualty of the current global economic turmoil, says Swiss economist Marc Faber. Colossal busts in most asset types have been occurring over the past year, but he believes this is only the beginning.
Faber, who is also known as Dr Doom after he accurately predicted earlier stock market crashes, said this at OCBC's Global Treasury Regional Economic and Business Forum on Friday.
With dark clouds gathering over the global economy, Faber said the real storm is still to come. He expects the situation to get increasingly volatile as tensions between the private sector and governments grow.
Faber, economist, Marc Faber Limited, said: "We're in a situation where the private sector is tightening lending now, more cautious and reducing lending growth as a result of credit growth.
"At the same time, you have central banks throwing money at the system, cutting interest rates dramatically and manipulating markets by taking over private companies."
He said the overall environment is not favourable for most investors, especially as the global turmoil filters into corporate earnings over the next few years. But a safe haven or two may exist.
He noted that even in a slump, some sectors and regions will still expand. While China and India will not see demand for commodities totally vanish, some slowdown in growth can be expected.
He also likes real estate in rich emerging countries and healthcare among others. Faber added that Asian stocks are starting to look reasonably priced.
He said: "In Singapore, you have many companies with dividend yields in excess of money market yields. At least, you get paid for your patience to be in shares."
Geographically, he likes emerging markets like Cambodia and Mongolia. Singapore also makes the cut.
But Mr Faber does not rule out property prices sliding 20 per cent or more, and further falls in the stock market. But as far as alternatives go, it is as good as it gets.
He said: "I don't see any catalyst that will propel, in the near future, markets substantially higher in a sustained bull market. I don't think the Singapore stock market will make a new high anytime soon." - CNA