February 2, 2011
Russian stocks are “very inexpensive” and the country’s benchmark indexes are poised to rally 10 percent “starting now,” Marc Faber, publisher of the Gloom, Boom & Doom report, said in an interview with Bloomberg Television in Moscow today.
“The Russian market is an unappreciated market because the Western media has no clue about Russia and is always writing negatively about the political system and corruption when corruption in Europe and the U.S. are as bad as Russia,” said Faber, who was speaking from the Troika Dialog Russia Forum conference. “Technically, I think the market is going to break out on the upside right now and move up at least 10 percent.”
Russia’s Micex Index of 30 stocks advanced 0.9 percent to 1,771.64 by 1:19 p.m. in Moscow. The 30-stock gauge has added 5 percent this year, beating the MSCI Emerging Markets Index loss of 1.1 percent. It also outperformed the MSCI index last year with a gain of 23 percent versus 16 percent for the developing- nation measure.
Faber said the debt levels in Europe are “not sustainable” and in the next stage of the crisis, more governments will go bust. “With monetary policy you can postpone the final crisis for quite some time, first by creating inflation and hiding the debt problem but eventually it will come back,” said Faber.
Last year, Spanish and Italian lenders tumbled on concern the debt crisis might trigger sovereign defaults, throttle economic growth and threaten the existence of the euro. Greece and Ireland needed bailouts from the European Union and the International Monetary Fund in 2010.
Faber advised investors in commodities to take “some money off the table” in case of a problem in China or if prices “implode.”
Copper climbed to records in New York and London yesterday while aluminum and nickel increased to two-year highs as the appetite for risk rose amid reports Chinese and U.S. manufacturing expanded.