Following Dr Doom into Singapore - EWS

Don’t laugh, but someone thinks that Birkenhead could look like this

Despite closing most of my short positions, the CCI portfolio remains weighted towards a deflationary scenario, with positions in the US dollar (UUP), long-dated euro government bonds (IBGL) and the Ultrashort US Real Estate Index (SRS). The only inflation-weighted holding is gold (GBS), and I feel it could be time to add another.

Dr Marc Faber (nicknamed “Dr Doom”) remains one of my favourite financial commentators, and not simply because of his slightly-sinister middle-European accent, reminiscent of Peter Sellers as Dr Strangelove. Faber has consistently been one of the most prescient figures on the world scene, and certainly saw the current crisis coming. As his nicknames suggests, he’s no optimist, yet an interview from yesterday on Bloomberg contains the following:

Faber recommended buying stocks in Singapore because they are inexpensive relative to company assets. He said this is true particularly for the nation's real-estate investment trusts and banks.

Singapore's Straits Times Index has fallen 49 percent from a record one year ago.

"You should just buy the whole of Singapore,'' Faber said.

Now, that gets my attention, as Singapore has long been one of the best-managed economies in the world (coming in at number four in an Economist survey in January). And, there’s an easy way to “just buy the whole of Singapore”, as Faber suggests – the iShares MSCI Singapore Index Fund ETF (EWS.NYSE).

Now, I’m not suggesting that the Singapore stock market (and, thus EWS) can simply breeze through the “vicious economic downturn” that is about to unfold - a major exporter like Singapore will be hit, make no mistake. However, the index has already fallen by half, and EWS currently sports an impressive dividend yield. EWS can, I believe, benefit both from any sustained “dead cat bounce” over the next few months, and also be safe to hold through to the other side of the recession, while soaking up those divi’s.

I’ve made a substantial investment today at $7.66 (about £4.59).