Saturday 12 September 2009
Jim Rogers: Wait and See Investment in A-shares, Big City Real Estate
Jim Rogers, an American investor and financial commentator based in Singapore who has been paying close attention to the Asian market, sees that in the past 10 months, A-shares values have doubled, but predicts that there will be a negative change in September-November. He adds he would neither buy nor sell shares at present, points out that in the next 20 years agriculture will be a very promising industry in China, and suggests that everybody play the role of “farmer.”
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Jim Rogers: Wait and See Investment in A-shares, Big City Real Estate
CSC, Shanghai
11 September 2009
Jim Rogers, an American investor and financial commentator based in Singapore who has been paying close attention to the Asian market, sees that in the past 10 months, A-shares values have doubled, but predicts that there will be a negative change in September-November. He adds he would neither buy nor sell shares at present, points out that in the next 20 years agriculture will be a very promising industry in China, and suggests that everybody play the role of “farmer.”
In the first half of this year, China’s economic stimulus policies to deal with the financial crisis and lending of seven trillion yuan boosted domestic stock and property transactions and prices hit new highs.
But the A-share market has been fluctuating recently between 2600 and 3000 points. At the second China International Financial Services Conference, held at Guangzhou in South China on September 9-10, Rogers noted that although China’s economy is improving, market risk is brewing, and he predicted the Hong Kong market could have problems in the next few months, which will affect the domestic market. Rogers believes that the current autumn round is perhaps the shift from bear to bull market, and investors should be patient and wait for opportunities to buy rather than rush into the market.
In addition, conditions in Europe and the US have not fully recovered, and their lack of improvement will influence China’s exports and affect its markets. Time is needed to observe the continuing development of the European and US economies.
Rogers believes that, just as the market has worried, huge amounts of money issued by central banks is leading to inflation, and that investing in commodities would be a good choice, especially raw materials, natural resources, energy and bulk commodities. Non-renewable resources will be particularly profitable products in the next round of investment. The prices of silver, sugar and coffee have decreased 70% from their high points. When the global economy picks up, demand for commodities will rise, so will prices. If economies continue to falter, governments will continue to release liquidity, and commodity investors can benefit from the effects of inflation.
Rogers emphasizes that in recent years a food crisis has emerged, and may become serious in the next decade. Investors should pay attention to commodities such as wheat. In the long run, investors should watch growth industries. China’s agriculture, for example, has great growth potential due to huge investment from the government in recent years. In addition, water conservancy in Asia has great potential because India and China are often affected by flooding or drought. Tourism is also promising.
Rogers predicts the USD’s status may be reduced in the next 5-10 years with the development of Asia and the decline of the US. He reasons that China, Japan and other Asian countries are gradually hold financial claims and European and American countries are turning into debtors, meaning that global capital flows are diverting to Asia. In terms of historical evolution, the economic center was in the UK in the 19th century, then in the US in the 20th century. It may well be China in the 21st century.
Rogers believes that domestic real estate development is good. In the past two months, housing prices have greatly increased in many cities, but he says he would not buy property at present, especially in Shanghai or Hong Kong.
In response to the financial crisis, central banks have released vast liquidity but different orientations have emerged in China and the US. Rogers says that in the first half year China invested in medium and long-term infrastructure, which can enhance future competitiveness, truly investing in the future, while the US invested 70%-80% of the resources into short-term projects.
It is generally believed that huge amounts of capital released, whether invested in short or long-term projects, will bring on inflationary pressures. The difference is that the pulling effect of short-term projects for follow-up competitiveness is not as good as for long-term projects. In evaluating government efforts to relieve the financial crisis, Rogers says that China and Singapore have done better than the US or Britain.
Every investor must start-up a plan before heading up on buying a property. Learning the basics of real estate is essential rather than visualizing the money aspect. Listen to skilled professionals like bankers, estate agents, home inspectors, etc., they most likely know the latest trend.
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