SINGAPORE –- Former Morgan Stanley economist Andy Xie is renowned for his contrarian views on China’s economy and stock markets. Now he’s predicting not only that China’s stock market will crash imminently, but that the global boom in equities will end by 2006 and will coincide with a worldwide recession.

Xie reportedly told a news source the recession will start in the U.S. and spiral down into Asia impacting exporters there.

I think it’s going to be bust very soon, he stated, noting that a combination of excess liquidity, rising inflation and rich valuations would culminate in a global crash.

"People will be surprised. When the end comes, it’s going to be pretty bad,” Xie was quoted.

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Xie worked at Morgan Stanley for nine years and spent five years as an economist with the World Bank

He observed that China was not doing enough to limit its stock market. Since the start of 2007, the Shanghai stock index is up about 44 percent. China’s central bank has announced it would life reserve requirements by a further 0.5 percentage point, the fourth reserve increase this year. But Xie said this would not curtail the "humungous” excess liquidity in the market.

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