Investment guru Marc Faber says correction has begun in markets across the world. Excerpts:
Your call on China: what's your take on the weak economic and financial market news flow?
The Chinese have implemented the world's largest stimulus package. These packages have not helped the economy much. It has created another kind of stock market bubble. This is being corrected now.
Do you expect more of a correction in China?
The markets are no longer free, there is continuous intervention. The Chinese markets came down 10-20 per cent on the hope that government would implement supporting measures. Predicting markets worldwide is extremely difficult. The S&P in the US reached 1,000 two days ago from 650 in March. If the S&P were to drop 10-20 per cent, then the Federal Reserve would monetise massively.
Do you think India is vulnerable to a correction if global markets continue to fall?
Yeah. In China, we saw a fall of about 17 per cent from the peak. The US markets are a little bit oversold and might rally again. I would not be surprised if the early August highs were actually the high for the year.
Is that a call just on China or on all markets, that the high in August will be the one for the entire year?
Correction has begun in most markets. Between March and August, there has been a rise in commodities and equities. Bonds did not perform well and the dollar was weak. I think, for the next one to three months, bonds could rally somewhat and the dollar could recover somewhat.
