Investor Jim Rogers Buys Chinese Shares as Market Hits `Bottom'
By William Bi
April 27 (Bloomberg) -- Investor Jim Rogers is buying Chinese shares, among the world's worst performers this year, as the market has bottomed, and he's focusing on agriculture, tourism, airlines and education.
``All my new money goes to commodities and China,'' said Rogers, who co-founded the Quantum fund with George Soros in the 1970s and correctly predicted the start of the commodities boom in 1999. He spoke at a seminar in Beijing yesterday.
``All the panic looks like a bottom,'' he said. ``I have bought in the last four to five weeks. I've been buying shares in China for the first time in a long time.''
China's benchmark CSI 300 Index plunged as much as 39 percent this year, becoming at one point the world's second- worst performer, amid speculation government steps to quell inflation would hurt corporate profits. The index is a measure of shares traded in Shanghai and Shenzhen.
The stock market, the world's fourth biggest, surged almost six-fold in the two years through 2007, driven by optimism growth in the economy would boost earnings.
The slump triggered government moves to support the market, with the latest taking effect April 24, when the tax on stock trading was reduced. Chinese stocks jumped 9.3 percent that day, the most since Oct. 23, 2001, helping lift the index to a 16 percent gain last week.
Analysts Differ
Some analysts remain unconvinced the measures will have an effect with Morgan Stanley and Credit Suisse Group last week saying China's shares are a ``sell.''
``Given earnings deceleration, we do not think such a rally can last,'' Morgan Stanley's Jerry Lou and Allen Gui wrote in a report April 25. ``The government's cut of the stamp duty seems to suggest that it is running out of silver bullets.''
Chinese companies' Hong Kong-listed `H shares' are more attractive than yuan-denominated `A shares,' Credit Suisse's Vincent Chan wrote in a separate note.
Selling Chinese shares in 2008 ``is a big mistake,'' said Rogers, adding that he had also bought stocks in Singapore, Taiwan and Hong Kong. ``I have never sold any Chinese shares.''
Rogers said he bought shares related to tourism and education, which ``in China will continue to be a major industry.'' Other investments include those of airlines, water companies and agricultural producers, he said.
``China has a huge agricultural problem,'' Rogers said. The ``government is doing everything it can to revive the agriculture industry.''
Yuan to Climb
Rogers was bullish on the Chinese yuan, saying it could eventually rise to 2 yuan per dollar.
``Don't sell your renminbi, because it will go a lot higher in the next 20 years,'' Rogers said.
The yuan has gained more than 4 percent against the dollar this year, after climbing 7 percent in 2007. The currency traded at 7.01 to the dollar April 25.
Rogers traveled the world by motorcycle and car in the 1990s, researching investment ideas for his books, which include ``Adventure Capitalist'' and ``Hot Commodities.''