Bears in charge, says U.S. fund guru

Date: Thursday, March 27, 2008
Author: Seo Ji-eun, Staff Reporter, Joong Ang Daily

Jim Rogers, the co-founder of the Quantum Hedge Fund with financier George Soros and a legendary U.S. investor, says the bears are in charge everywhere, except for commodities and Taiwan.
He sees virtually all commodities picking up in the next decade and he is upbeat on Taiwan, hoping that the recent election there will result in improved ties with China and more robust cross-strait trade. The island has been separated from the mainland since the retreat of the Nationalist Chinese army to Taiwan in 1949.
¡°Other than Taiwan and commodities, I don¡¯t really see a bull market anywhere,¡± Rogers said in a telephone interview with the JoongAng Daily. ¡°I bought Taiwanese airline shares recently because of the expectation that it will recover ties with China for the first time in 60 years.¡±
The investment guru, who predicted the start of the commodities rally in 1999, said sugar, among other commodities, is still trading 80 percent below its all-time high. ¡°There is always something consolidating and correcting. Basically the bull run in commodities is not over and if you get it right, you will make a lot of money,¡± he said.
Asked about prospects for the Korean market, he said the country has two things that should ensure continued success. One is its rich neighbors, especially China. The second is that reunification, when it is realized sooner or later, will be a great chance for Korea.
¡°I used to own shares in Korea but I have nothing at the moment. I have sold out of most emerging market shares but I don¡¯t consider Korea an emerging market,¡± he said.
Why? ¡°Oh, please,¡± he said. ¡°If Korea is an emerging market, what is not an emerging market? Korea is the 13th richest country in the world!¡±
Despite his pessimism over most investments, particularly stocks, he said there is not much to worry about in the Chinese stock market, which many others speculate may burst after the Beijing Olympics this summer, especially given the Chinese market¡¯s sluggish performance lately. The benchmark Shanghai Composite Index is down almost 20 percent this month and 41 percent below its record high last October.
¡°China will be the next big economic powerhouse. There is always a bubble in markets that are developing. I do not see a bubble in the Chinese stock market. I have never sold Chinese shares,¡± he said. But with real estate in China definitely in a bubble, some real estate speculators in the country will go bankrupt, he predicted.
The former Wall Street fund manager also said he is dumping U.S. dollars because of the country¡¯s gloomy economic outlook. He is buying Chinese renminbi (yuan), yen and Swiss francs.
¡°The U.S. dollar will no longer be the world¡¯s reserve currency,¡± he said, adding that the yen and yuan will continue advancing. The United States is in recession already, he asserted, but does not know how long it will last. ¡°I think if the U.S. Federal Reserve continues making mistakes, it will go on for a long time. In the 1970s, the bank made many mistakes so we had a very long period of bad economy. I am not very optimistic about what¡¯s happening in America.¡±
Rogers, 65, moved late last year from New York to Singapore, foreseeing the mounting influence of China. His 5-year-old daughter is fluent in Chinese, he said, and another daughter was born this month.
He gained the nickname ¡°Indiana Jones¡± for his globe-hopping investment research. Retiring from Quantum at the age of 37 in 1980 after raising the value of the fund 4,200 percent in a decade, the multibillionaire has been a finance professor and lecturer, creating the Rogers International Commodity Index, which tracks 35 commodities. He says he still spends over 100 days on the road each year.