The Next 10 Years Belong to China

04/07/2011 1:20 pm EST

Focus: GLOBAL

Jim Rogers

Author, Street Smarts: Adventures on the Road and in the Markets

China will become the unequivocal market leader within the next ten years, said investment legend Jim Rogers at the World MoneyShow Shanghai. Rogers also maintained his bullish outlook on commodities.

Jim Rogers makes ​​no secret of his optimism about China's financial market.

A guru whose global-investing credentials are numerous—his Quantum Fund was one of the first successful international funds—believes that China and Asia will become the center of the world in the next ten years, he said in an interview at the World MoneyShow Shanghai.

“We sold our house in New York in 2004 and moved to Singapore," he said. "Now my two daughters can speak very fluent Chinese. I will also open Chinese stock trading accounts for them.”

Currently, Rogers does all his investment in China through his personal trading and bank accounts. He insists that he is just an investor—he hasn’t even been to his office in Singapore.

"I do not trade often. Once an investment is made, it’s for 20 years, unless something significant happens. And I only like those cheap stocks that nobody pays attention to.”

During a 1999 trip around the world, when Rogers reached China he opened a B-share account at Haitong Securities. He says he hasn’t sold the B shares bought at that time. But now the A-share market is too expensive. If stock prices fall, he will buy a lot of stocks—but not real-estate shares.

Apart from China, Rogers has also invested in a number of other Asian countries, such as India, Japan, and Singapore.

He said that there are still plenty of opportunities in emerging markets—especially those markets most people consider immature, such as Myanmar and Laos—because the lower the price, the bigger the profit. He also said that in his lifetime, one country that might compete with China will be South Korea.

Global Inflation Will Continue, So Hold On to Commodities
Rogers said that worldwide shortages of many raw materials, combined with hesitance to increase production capacity by many manufacturers, will keep prices soaring. Making matters more acute, many central banks are printing money to stimulate economic activity.

“Due to the current unbalanced supply and demand, commodities will see a continued bull market, pushing up the prices for oil, rubber, metal, and other raw material," Rogers said.

"If the economy improves, shortages of raw materials will get worse. Holding commodities will bring huge profits. Even in the case of a lower-than-expected economic upturn, commodities will beat expectations."

During his current visit to Shanghai, Rogers bought physical gold and silver through the Bank of China, showing the assembled crowds at the World MoneyShow some of the coins he purchased.

“There may be better investments than gold, such as agricultural products and silver—but I will not sell my gold, I want to leave it to posterity," he said.

As to concerns about whether the current $1,450-plus an ounce gold price is already too high, Rogers remains bullish, believing that gold price will break $ 2,000 an ounce.

“Gold rose for more than ten years and saw no adjustment, so it’s natural to have some volatility going forward," he said. "But in the long term, I still think gold will go up. So, it’s a good idea to hold and even increase investments in gold and silver, or buy stocks of companies that manufacture gold or silver.

"Silver has not risen as much as gold, so it might have even better performance over the next ten years.”

However, Rogers does not have quite the same opinion about oil. He said he is not currently buying crude, but is holding onto the contracts he already has. “I will not short unless a particularly serious problem occurs or fundamentals change dramatically," he said.

Interestingly, Rogers is particularly bullish about agriculture, and recommends sending children to study farming.

“Today, we have too many MBAs, but fewer and fewer farmers. Wheat, rice, soybeans, and other agricultural products’ prices will rise quickly. Lamborghinis will be driven by farmers in the future.”

This story was based on an interview conducted April 2 by Ji Chen and Yan Ting of China Business Network.

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