Private credit might be less attractive than it was last year as investors rush into the market, but there are sweet spots to be found.
ChinaÆs resilient economy, strong domestic consumption, high savings rate, and huge foreign reserves make the country a stand-out amid the current global financial crisis, says Rogers. And the country will emerge even stronger, he adds, when the dust of a prolonged global economic recession settles.
Rogers co-founded the Quantum Fund with George Soros in 1970, one of the first international hedge funds. He is now most famous as a commodities investor, having launched the Rogers International Commodity Index in 1998 and proclaiming commodities a better long-term investment than equities.
Rogers is not one to mince words when it comes to his great confidence in China. At the two-day Asian Financial Forum in Hong Kong that started Monday, Rogers bombarded the mainland with praise before the estimated 1,000 bankers, institutional investors, fund managers, business leaders and senior corporate executives in attendance.
ôThe 21st century is the century of Chinaö and the mainland is going to be the new political and financial centre of the world, he says.
While Rogers doesnÆt turn a blind eye to prevailing concerns over ChinaÆs economy û exports are slowing, the domestic economy is showing signs of weakness, unemployment is on the rise û he sees these as temporary setbacks.
ôDon't think it is the end of the story,ö Rogers says, referring to ChinaÆs short-term problems. ôYou should pick up the phone and get involved in China.ö
RogersÆ faith in China forms the bigger part of his current passion for Asia. ôThe focus of the West is moving to Asia,ö he says. ôAsia is the place to be.ö
Indeed, Rogers uprooted his family from New York in 2007 and moved to Singapore. ôIf you had cleaner air, I would have moved to Hong Kong,ö he says.
Rogers believes that being based in Singapore makes him better-positioned to take advantage of the investment potentials of this region. He has in the past likened moving to Asia now to moving to New York in 1907, before the boom times in the US. No talk by Rogers is complete without him highlighting how û as added proof of his bullishness over China û his eldest daughter is being tutored in Mandarin to prepare her for the future.
Commodities, meanwhile, are expected to benefit even more after the global financial turmoil is resolved because when that happens, real assets will prove to be more valuable, says Rogers.
RogersÆ bullishness over commodities stems largely from demand and supply estimates for various commodities such as oil, mining, and agriculture products. He notes that there have been no new major oil discoveries, for example, and the supply of commodities has generally been declining while demand continues to rise.
Never the dull speaker, Rogers urges people in Wall Street and elsewhere with MBAs to exchange their degree for an education in agriculture, which he says will be more useful in the future.
Blaming the failure of rating agencies to pinpoint the credit crisis on ô28-year-old MBA graduates who didnÆt know what they were doingö, Rogers says such rating agencies have lost their relevance and should simply be ignored.
Meanwhile, Rogers is also bullish on the yen while bearish on the US dollar, bonds, and stocks. Remembering what happened to the pound sterling when the currency lost its lustre, Rogers says he intends to unload all his US dollars at some point this year.
Investors need to be ôvery worried about the US dollar,ö he says.
He notes that the rally in bond markets, particularly in the US, is bound to end badly. ôIf you are a bond portfolio manager, I suggest you find another job.ö
He doesnÆt believe stocks will revert to their pre-credit crisis bull years and he expects them to trade within a narrow range for many years to come.
ôIf you are an equities investor, start getting out,ö he says.
Rogers says he made money last year by shorting the likes of Fannie Mae, Freddie Mac, Citi and other investment banks while buying gold, sugar and the yen.
ôThank God for Fannie Mae, Citi, Lehman Brothers and Bear Stearns,ö he says, referring to how shorting those stocks proved to be right, ôotherwise I couldnÆt buy lunch.ö
Just last week, he says he started buying China shares again, without divulging any specific ôhot picksö. Generally, he is bullish over a number of companies involved in mining, water treatment, power, building, infrastructure, and tourism.
Turning his focus on the US, Rogers couldnÆt help but criticise the US governmentÆs bailout programme of financial institutions û which he doubts will work û and criticise the Federal Reserve for the way it has handled the crisis as well as incoming Treasury Secretary Timothy Geithner for possibly not being the best man for the job at this time.
He blasts the US for devaluing the US dollar by printing more money in a bid to stave off any further fallout from the credit crisis.
"The idea that you can fix a period of excess borrowing and excess consumption by more borrowing and more consumption to me is just ludicrous," he says.
Rogers isnÆt particularly optimistic about the next administration, noting that president-elect Barack Obama ran on a platform that included a proposal to tax capital û ôthatÆs madness if you ask me,ö he says û and protecting the workers. He notes that Obama has backed off from those previously strong stands, however.
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