DSA Summit: Jim Rogers bats for China, says PE investments can fetch better valuations

Jim Rogers
Jim Rogers at the Asia PE-VC Summit 2017

About 10 years ago Jim Rogers, the chairman of Rogers Holdings and Beeland Interests, Inc, shifted from New York and moved to Asia where he foresaw the investment future. He doesn’t repent his move and feels that the region today offers more opportunities in the equity market than the Europe and West, and that China was going to lead the growth in Asia.

“The Chinese market is down 50 per cent from an all-time high. If you are looking at PE investments in China, you may get better valuations,” said Rogers, delivering the keynote address  at the Asia PE-VC Summit 2017 of DEALSTREETASIA’s flagship annual conference in Singapore on Thursday.

Rogers, who is known to be a prolific investor,  has invested in four startups in the last year, three of which were Korean firms. Investment in online brokerage firm Tiger Brokers was his first investment in a Chinese startup.

On the opportunities present in Asia, Rogers said, India produces 10 times more engineers than the US, and China produces 20 times. He further said that he would make future technology investments in Asia and not in the US, because Asia was the future of high brains and innovations, he added.

“The 19th century was the century of the UK, 20th century was the century of the US, 21st century will be the century of Asia and China,” he noted.

He highlighted that China was at the pinnacle 3-4 times in the history, and that the country also saw 3-4 periods of sudden collapse. But it is the only country to have taken a few decades to turn around and rise to the top again.

Talking of other Asian economies, Rogers said, he was bullish on Indonesia and Myanmar too but said he was not keen to invest in India unless he comes across the right people.

High Growth Sectors in China

Rogers said, he was terrified to enter China first in 1984 owing to the European propaganda that he read about all his life about the Chinese. But, all his doubts were cleared after visiting the country, he recalls.

“People in China are educated, ambitious, hard-working and they save a lot of money for their children and their future. They save over 35 per cent of their income and work hard to educate and discipline their children. In America, the saving is mere 2 per cent and the debt is going higher and higher every day.”

He felt that the country is going to offer tremendous investment opportunities in the future.

“China is very dirty, but somebody is going to make a fortune cleaning it. Earlier it was difficult to travel to China, but today many restrictions have been eased. China’s tourism industry is going to be one of the high growth industries in the future.

Flaws in Indian Bureaucracy

Rogers said, India is a wonderful place with extensive tourism comprising a host of man-made and natural sites, but said it is not the best place for him to invest.

“The country is diverse in terms of languages, food, and culture. But, it is not a place to invest unless you are in with the right people.”

He counted India’s bureaucratic red-tape as one of its primary bottlenecks.

Amateur Markets of Myanmar

Myanmar is blessed with abundant natural resources, Rogers said, adding that it has India on one side and China on the other. In 1962 Burma was the richest country in Asia, and now more than 50 years later Myanmar is the poorest nation in the region.

He said that the country needs to encourage its public markets to attract more investments. Myanmar launched its first stock exchange with just one listed company in March 2016.

“For the full 50-year period the country didn’t have anything. If it can get the stock market up and running, investments would flow in.”

Challenges Going Ahead

The commercial banks led by the American central bank have slashed interest rate to the lowest in the recorded history.

“Some acknowledge that it’s an experiment. But, according to me it’s not going to work In fact, it is going to lead to gigantic problems around the world. We still have leftovers from the problems faced in 2008, and those problems are going to come back, and they are going to be worse.”

If interest rates go higher, it is going to wipe out a lot of people. Many pension plans and companies have already turned insolvent in the West. In 2008, we had a problem because of too much debt and today the debt is higher that it has ever been, he said.

“I foresee economic problems, and that interest rates are going to go higher, and when they do, it’s going to lead to gigantic problems. US dollar has been very strong in the recent years. In my view it is going to get stronger as people would look at it as a safe haven in periods of turmoil. This would lead to opportunities too because all the currencies will go down in Asia including China.”