Veteran investor Jim Rogers has been investing in Chinese stocks for the last 25 years. During his recent trip to China, Rogers (R) talked to Global Times (GT) reporters Zhang Ni and Hu Weijia in an interview in Shijiazhuang, capital of North China's Hebei Province, where he was attending a forum on finance. Rogers is still upbeat about China's future and believes the 21st century will belong to China.
GT: China's economic growth has been slowing down but the mainland stock markets are booming, with share indexes doubling in value since the beginning of 2014. Does this mean mainland stock markets are rising into bubble territory? What do you think of the outlook for the markets?
R: I don't know for sure whether mainland stock markets will return to the peak reached on October 16, 2007, when the Shanghai Composite Index reached a record high of 6,124.04 points, but I suspect they will.
This judgment is based on the fact that the country's stock markets have languished for most of the past six or seven years, with the share prices remaining at an undervalued level.
China is now a richer country than it was in 2007, and the share indexes will eventually catch up with the economic growth, but it is not an easy question to answer when this will happen.
I suspect the share indexes may catch up in the next year, but I hope the surge can slow down so the rise could be more balanced - it would be better if it took two or three years to reach the 6,000 level again.
GT: Will you trim your holdings of Chinese stocks, and what are the industries you focus on?
R: If the mainland stock markets continue to go straight up and enter into bubble territory in the future, I will have to sell my holdings of Chinese stocks, but I hope this will not happen.
I bought Chinese stocks for the first time 25 years ago and have increased my holdings several times in the past few years.
I'm currently paying close attention to areas addressed by the Third Plenary Session of the 18th Communist Party of China Central Committee in 2013, which include railroads, healthcare, finance, petrochemicals, online retail and agriculture.
GT: The Chinese stock market is a relatively closed one and not connected with the world market. What are the advantages and disadvantages of such a market?
R: Yes, it is a closed market but it's opening up more and more. The advantage is that sometimes it is shielded from problems abroad. If there are problems abroad, they do not necessarily affect closed markets like China.
But China has become a more and more global economy. Therefore that is not so true of China now as it has been in the past. So that advantage has become less and less. The disadvantage of being a closed market is that it's not subject to the reality of the whole world, which it should be.
For instance, sometimes the world economy is doing well, but if the market is closed to outsiders, the market will not reflect the fact that the world is doing well.
I can think of no good reason why a market should be closed for any long period of time. China has been opening its market more and more, which is good for both China and the world.
If I were China, I would open all of the markets today. China is a successful and very strong nation, and there is no reason to close up any more.
GT: While the Chinese stock markets have been on a bull run, the property market has cooled down. Do you think there is still a bubble in China's property market, and are you going to invest in it?
R: I would not buy Chinese property unless it was in the countryside. There are probably good places to buy houses in the countryside, but house prices in most of the cities are very expensive, and most of the cities have too many buildings. When I traveled around China, I also saw many empty houses in cities.
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Jim Rogers started trading the stock market with $600 in 1968.In 1973 he formed the Quantum Fund with the legendary investor George Soros before retiring, a multi millionaire at the age of 37. Rogers and Soros helped steer the fund to a miraculous 4,200% return over the 10 year span of the fund while the S&P 500 returned just 47%.
od giveth and The Governments sometimes taketh away... it is a tough call when you have a fixed asset of real estate... A villa in The Countryside of China would be wonderful.... farming is important to feed the populations teaming in the city centers and in the industrial parks of Asia and The world. Increments of investments in a country like China is a good investment... Y a just hope people do not loose control and the world goes nutz again and goes into conflicts whereby assets are ruined or confiscated. The Imperial Japanese Army Corps were driving my Grandfathers black Buick as a staff car when they overtook The Philippines. There are probably cashes of Yamashita's war loot all over the Philippines islands yet still undiscovered.
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