The "experts" commenting on something half the world away ..
Biggs Says Asia Stocks to Beat S&P 500 in Next Year By Ye Xie and Tom Keene
Asian stocks will likely beat the Standard & Poor’s 500 index over the next year and China will need to allow the yuan to appreciate as much as 8 percent to avoid further inflation, investor Barton Biggs said.
“I’m a big bull on China,†Biggs, who runs New York-based hedge fund Traxis Partners LP, said at the Bloomberg China Investment Strategies conference in New York today. “
The S&P is going to beat Asia for the next three or four months, but over the next year Asia is going to be a tiger.â€
Biggs, who recommended buying U.S. stocks when the S&P 500 Index started rallying in 2009, said last month global stocks may rise between 10 percent and 20 percent depending on the pace of economic recovery.
The yuan advanced 3.7 percent since the government relaxed a two-year dollar peg in June and reached 6.5808 on Jan. 24, the strongest level since China unified official and market exchange rates at the end of 1993. The currency has gained 26 percent since 2005.
“The right thing for China, for America and for the world is for the RMB to appreciate and it really should appreciate not at a 5 percent rate,†Biggs, 78, said. “The best way for the world is a gradual 7.5 percent or 8 percent appreciation. If they don’t let it appreciate, they’re going to have inflation and serious wage inflation. And they’re already starting to have it.â€
Biggs said he’s bullish on China because
policy makers have managed the economy well. “I think China is going to be one of the two or three, maybe the best major markets in the world,†Biggs said. “Basically the Chinese have done a really superb job of engineering a soft landing. They did what we should have done going into the crisis. They applied massive stimulus very quickly. They came booming out of their slowdown. They may have overdone it a little bit.â€
The new government in China is unlikely to be destabilizing, Biggs said.
“China is a command economy and a command political system,†Biggs said. “The new government is fully vetted by the old government. I don’t think that’s a negative. For a developing country that started with a low per-capita incoming and is bootstrapping itself, a benevolent dictatorship is the best government.â€
Home Price Forecast
In the U.S., the
economy is vulnerable to further declines in U.S. home prices, said Biggs, a former chief global strategist for Morgan Stanley. Property values
may fall another 5 percent to 10 percent, he said.
Fund managers James Chanos and Marc Faber and Harvard University professor Kenneth Rogoff are among those who have warned of a crash in China if the government can’t stop the property bubble there. About 45 percent of global investors surveyed by Bloomberg last month said they expect a financial crisis in China within five years.
Biggs said he disagrees with Chanos.
Jim Chanos is probably the greatest living short seller and I have great respect for him,†Biggs said. “But I suggest he go to China before he gets too negative on it.â€
http://www.bloomberg.com/news/2011-02-0 ... china.html
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