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Mumbai , Sept. 25

INVESTMENT guru Marc Faber is bullish on the Asian markets including India but is bearish on US and European markets.

Mr Faber of "The Gloom, Boom and Doom" report fame, who is in India, feels that the money is expected to shift from bonds to equities, as the dividend yields on equities is higher than bonds.

According to him, investors should hold real assets such as gold and real estate in their portfolio compared to financial assets such as bonds and equities. He feels that the commodities to do good in the next few years. His argument for rise in the commodities prices is that the consumer balance sheets are highly stretched and rising interest rates may hurt consumption and the booming housing industry. "Under this scenario, commodity prices will rise even more."

On the Indian equity market, Mr Faber said he expects the market to do well in line with the other Asian markets. However, he said select sectors like tourism has huge potential if the government realises it.

His argument for Asian markets to outperform other markets is better economic performance of Asia, including Japan, and this might bring about a further weakening of US dollar. "Asian economies are like a warrant on the US, but entail at present probably lower risks," he said.

The investment guru feels that after remaining bearish for the entire 1990s and early 2000s, Japanese equity market will perform well due to the good corporate earnings of Japanese companies over the next two years.

Due to the strong performance of the Asian equities, the US and European market would move in a narrow range, he said, adding that the high price-earning ratio of over 30 and price-to-book-value of 5-6 in the US market is unlikely to be sustained and this would lead to fall in the stock prices.

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