Wednesday 12 November 2008

Market rout may continue

The rout in global markets may continue while bonds will be a ‘terrible’ investment as economic problems may persist until 2010, investor Jim Rogers said.

1 comment:

Guanyu said...

Market rout may continue

12 November 2008

The rout in global markets may continue while bonds will be a ‘terrible’ investment as economic problems may persist until 2010, investor Jim Rogers said.

‘Stocks in the West are still expensive on any historic valuation method’, while ‘bonds are going to be a terrible place to be for the next 10, 20 years’, Mr Rogers, chairman of Singapore-based Rogers Holdings, said at a conference in Seoul on Wednesday.

‘Equities in the West will be ‘in a trading range for years to come’,’ he said.

According to Bloomberg news, more than US$28 trillion (S$42 trillion) has been erased from the value of global equity markets as credit losses and writedowns totalled US$690 billion in the worst financial crisis since the Great Depression.

The US has rolled out a US$700 billion bailout plan to buy bad assets from troubled banks, while central banks around the world have been cutting interest rates to unfreeze credit markets.

‘I have started going back into the markets; that does not mean it’s the bottom’, Mr Rogers said.

‘His purchases since mid-October include commodities and equities in China and Taiwan, as well as ‘a Korea stock’, he said, without giving details.

‘We may be hitting ‘a’ bottom’, Mr Rogers said. ‘I don’t know if it’s ‘the’ bottom.’

Mr Rogers, 66, correctly predicted the start of the commodities rally in 1999. His books include Hot Commodities: How Anyone Can Investment Profitably in the World’s Best Market and A Bull in China: Investing Profitably in the World’s Greatest Market.

Mr Rogers continues to favor commodities as an investment as fundamentals are ‘unimpaired’ amid a global liquidation of assets, he said. ‘You will see that stocks have gone down more so far than commodities. That will continue as far as I’m concerned.’

An MSCI index of developed- and emerging-market stocks has lost 44 per cent so far this year, compared with a 30 per cent decline in the Reuters/Jefferies CRB Index of 19 commodities.