First of all, the Chinese stock market is still well below its peak in 2007. Secondly, the stock market in China is lower than in August 2009, and is lower, as is the Hang Seng Index, than in November 2009. In other words, we have essentially a boom in properties not reflected in the stock market. I think maybe the stock market is giving us a signal that not all is right in China. And, all I am maintaining is that if the bubble bursts in China, you don't want to be in say, Australian stocks, in the Australian dollar, in commodities and industrial commodities like copper and nickel and aluminum, because the demand for commodities in a scenario of the Chinese bubble bursting is going to go down very substantially.
There's a risk now, it may not happen right away, it may only happen next year, but an investor should keep this in mind-- that when a bubble bursts in China, and for sure, if it doesn't burst now it will burst in 6 months, and if it doesn't burst in 6 months it will burst in 12 months or in 18 months, but the longer it doesn't happen the worse it will be.
~ Marc Faber, editor, Gloom, Boom and Doom Report, Bloomberg TV interview, April 21, 2010