Dr Doom warns of Chinese recession

This year will likely be a more difficult investment environment than 2012, says Marc Faber, publisher of the ‘Gloom Boom & Doom Report', as he urges caution over China's growth outlook.

Speaking at the Skagen conference in London on Tuesday, Faber, aka Dr Doom, said he is holding an equal proportion of cash, property, gold, equity and corporate bonds in his portfolio ahead of expected market volatility this year.

‘I’d be reluctant to be heavily short anything right now. For an investor, cash is not desirable but I would say that for the next 3 months it may make sense,’ Faber told an investor audience.

He said he is more positive on equity markets in China, Vietnam and Japan and sees value in select parts of the US housing market such as Atlanta and California.

He did, however, urge caution over recent data showing a rebound in Chinese trade towards the end of last year.

'There is a consensus that the Chinese economy has picked up. In my view, the past kind of economic growth in India and China is over. From here, we could have 4-6% growth at best. We could also have a recession in China.'

Speaking to Citywire Global in July last year, Faber revealed he had bought Italian, Spanish, Portuguese and French equities for the first time in his life.

 

‘I still hold European equities and I believe that they were at the lowest level in this generation last summer. I should have also perhaps bought Greek equity,’ he told Citywire Global on Tuesday.

 

‘This year will be a more difficult year and it’s hard to be bullish. I think we can be happy if we can make any kind of returns.’

 

A strong critic of the US Federal Reserve’s monetary policies since the financial crisis, Faber said he buys gold monthly to keep his allocation at around a quarter of his portfolio.

 

‘I hope and expect that the gold price will fall much further so that I can increase my position as I remain bullish on the gold price in the long term.’