INTERNATIONAL. Legendary global investor and chairman of Singapore- based Rogers Holdings, Jim Rogers said global equities are vulnerable to correction after rallying for the past 10 months and as governments around the world start withdrawing stimulus measures.
In an interview with Bloomberg in Hong Kong today, Rogers said: “We’re overdue for a correction.”
“Stock markets around the world have been going up for the past 10 months..” Rogers added.
The MSCI World Index climbed 67% from a more than 13-year low on March 9 as governments boosted spending and central banks cut borrowing costs to pull the global economy out of its worst recession since World War II. The index has fallen 4.9% from a 16-month high on January 14.
Earlier this month, China's central bank reduced credit supplies in the world's fastest-growing economy. The People's Bank also raised its yield on 1-year bills by 0.08% – twice the expected rise – and withdrew a one-day record worth US$29 billion in cash from the Chinese bond market.
Rogers, who took a “senior consultant” position with China’s Dalian Commodity Exchange in October, has long been a bull on the nation’s economic outlook. He also moved his family to Asia in 2007 to tap the region’s growth and to allow his children to learn Mandarin.
The legendary global investor told Bloomberg last week that he hasn’t sold any of his Chinese stocks even after last year’s rally. He reiterated that the last time he purchased stocks in the country was between October and November 2008.
Still, the rally in global stock markets means a “consolidation is overdue,” Rogers said. Commodities are a “much better place to be” than stocks, he said.
“I don’t think anybody has tightened enough. I think everybody should tighten more,” Rogers told Bloomberg today. “We have huge amounts of money printed throughout the world. It’s going to cause currency instability. It’s going to cause more inflation. It’s going to cause higher interest rates.”
Rogers has clearly been unhappy with the massive monetary easing the Fed has engineered under Chairman Ben Bernanke.
He has been reiterating in many interviews that printing money has been tried many times throughout history in many countries and has never worked in the long term.
Rogers expects the staggering amount of printed money will eventually lead to serious problems down the road.
In some of his recent most memorable 'rants' he was quoted as saying:"How can the solution for debt and consumption be more debt and more consumption? How can that be the solution to our problems?"
"What we're doing now is we're taking the assets away from the competent people and giving them to incompetent people and telling them 'now you can compete with competent people with their money."
"We're going to have zombie capitalism for the next 15-20 years. How long are you going to let the bureaucrats run the thing so we can't have a clean system?"
Rogers has spent a career being one step ahead of mainstream investment thinking. He rose to fame after co-founding the now-closed Quantum Fund with George Soros nearly four decades ago. During his ten years with the fund, the portfolio gained more than 4,000%, while the S&P rose less than 50%
The Quantum Fund shot to fame after making more than US$1 billion betting against the British Pound in early 1990s.