Marc Faber: Buy Vietnam, hold gold

Hong Kong-based Marc Faber, who famously foresaw the commodities boom of the last decade and the Asian crisis of the late 1990s, has long touted Asia's potential. He remained bullish on the region at the annual roundtable discussion of investment experts hosted by Barron's.

"I have seen Macau go from a sleepy village to a gambling centre seven times the size of Las Vegas," says Faber. "Chinese tourism in Thailand grew by 90% last year." Tourism is one reason he's keen on Vietnam.

He reckons the beach region around Da Nang, which has just built an international airport, offers ample potential for growth over the next few years.

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Vietnam's economy "has had its troubles", says Faber, but the outlook has improved of late, as we also pointed out last month. Real estate is bottoming after a slide over the past few years.

As far as the stock market is concerned, restrictions on foreign ownership endure, but "in time the rules will be liberalised."

One of his favourite stocks is Vietnam Dairy Products, which should be able to keep growing at 20% a year. Asian consumer stocks are no longer cheap, "but in time, multinational consumer companies will want to acquire them because they have distribution in the region".

Vietnam Dairy Products is one of the main holdings of MoneyWeek's favourite Vietnam play, the Vietnam Opportunity Fund, which remains reasonably priced on a discount of 23% to its net asset value.

Faber is still gloomy on the prospects of the developed world, as endless money-printing by the US Federal Reserve and other central banks looks likely to end in an inflationary collapse of paper money. "I own physical gold because the system will implode." In fact, says Faber, "20% of my net worth is in gold".