Jim Rogers, Chairman, Rogers Holdings, in an interview with
ET Now, speaks about the global
markets and Indian economy with a special reference to rupee.
Excerpts:
ET Now: Let me first start with the very basic question. How do
you view the current situation in Europe given the fact that how Spanish bond
yields of late have expanded and it is evident that austerity versus growth in
the near term, it is growth which is clearly moving around?
Jim Rogers : No, nobody in the West is managing their problems with their
austerity problems very well. Just look at the numbers, every single one of
those has higher and higher debt. Even Greece which theoretically wrote off a
lot of debt, the debt is going higher. This probably has not been solved. This
problem is being pushed down the road. It is going to come back and it is going
to come back worst next time around. Be very careful.
ET Now: So would you say that the markets are more news driven
than reacting to fundamentals currently?
Jim Rogers : The news has an affect for maybe an
hour, a day or so, maybe even a week but no, markets basically always are
reacting to the fundamentals. There is noise in the markets partly because of
so much of news on TV these days but no, in the end even in the medium term,
markets rely to fundamentals, not on the short term news.
ET Now: So how would you look at 2012 in terms of growth? Would
you say that liquidity stimulus in countries is the main reason why economic
data of late has been strong but the real concerns are far from over?
Jim Rogers : No, of course central banks around
the world have been printing staggering amounts of money over the past 4 years.
So, no, all of this is out of issue. It is based on huge amounts of money that
are being printed and huge amounts of money which are being spent. There are 40
elections around the world this year and all of those politicians want to be
re-elected. Some of them are big countries, France, America. We have some big
countries with big elections and next year the Germans will have elections. So
you are going to see a lot of money being spent, a lot of good news for the
people who get that money. For the rest, the situation continues to
deteriorate.
ET Now: In the emerging markets, where do you see a faster and more
sustainable growth number coming in, which region?
Jim Rogers : The faster the numbers that will be
better in economies which are well managed and which have commodities because commodities are in a bull
market. Indonesia is doing much better this decade than they did in the 1990s
because there was a commodity bear market in those days. Australia is going to
do better than Belgium. Canada is going to do better than the United States. So
you look for well managed countries which have a lot of commodities and you
will probably make a huge amount of money. I am not putting money in the Congo
which has a lot of commodities because this is not well managed. I would look
at well managed commodity countries.
ET Now: Let's talk about your
favourite topic, commodities. Commodities have not done well in the current
quarter nor have commodity currencies like Australian dollar or New Zealand
dollar. How would you view commodities in the current market environment?
Jim Rogers : In my view, commodities are in a
secular bull market, a bull market which has several more years to go. I own
commodities, I am not thinking about selling my commodities. If they go down, I
will buy more. Until a lot of supply comes on stream in all commodities,
commodities have to be a good place to invest.
ET
Now: Geopolitical tension still surrounding Iran, still unabated and the US
inventories are already at a 21-year high, crude is still much higher, where do
you see the prices headed?
Jim Rogers : I am not smart enough to know that,
I presume you can watch some of the economic TV stations and you will figure
all that out. I do know that world's known reserves are declining and unless
world finds a lot of oil in their accessible areas very quickly, the surprise
is going to be how high the price of oil stays and how high it goes. Now if
Spain goes bankrupt next month everything is going to go down including oil but
if that happens I would urge you to buy a lot more because the price of oil
over this decade is going to go much higher.
ET Now: So looking at the current economic uncertainty at a time
when global growth scare is back and economic growth is quite anaemic, which
are the sectors you would recommend our investors or our retail viewers should
put their money to work, bonds, commodities, equities?
Jim Rogers : Agriculture is going to be the big thing in the
next 20 years. The best thing you can do is to become a farmer, that is where
the money is going to be made. It has been a disaster for the last 20 years but
the farmers are going to be driving the Lamborghini in the next 20 years, the
stock brokers are going to be driving taxis. The smart ones will learn how to
drive tractors so they can work for the smart farmers. Anything to do with
agriculture, seeds, tractors, fertilizer, water, anything to do with
agriculture is going to be extremely profitable over the next 20 years.
ET Now: So amongst the
industrial agri commodities like cotton as well as rubber, where there has been
a decline due to the China's slowdown, how would you see these commodities
going forward?
Jim Rogers : All agricultural commodities are
going to go much higher. We have serious problems developing in agriculture.
The average age of farmers in America is 58, in Japan it is 66, and Australia
it is 58. The world is running out of farmers so unless the price goes
much-much higher we are going to have very very great shortages in agriculture.
So prices are going to go a lot higher because of the serious fundamental
shortages which are developing.
ET Now: Indian government has recently opened exports in sugar and
cotton. What is your reading into this policy change and how will this impact
cotton and sugar prices in the global markets?
Jim Rogers : India has a history where you could
be one of the great, have been one of the great agricultural countries of the
world. Indian government keeps messing with their agriculture industry. If the
Indian government will just get out of the way of Indian farmers you could see
fast production coming out of India. All of the short term measures are doing
nothing more than disrupting the Indian farmers and the Indian markets.
Unfortunately 100s of 1000s of Indian farmers commit suicide every year because
the Indian government just makes it worse by cluttering up the market in trying
to over regulate. It will be good for the world, it will be great for India if
the Indian government would stand aside, let the farmers have their head and
make their profits. The world would then be a lot better off and India would
certainly be a lot better of.
ET
Now: How do you see the Indian rupee decline to four months lows, also the
S&P downgrade and the fiscal economic challenges that the country is
currently facing?
Jim Rogers : As I have told you India is
certainly a magnificent country to visit but I am not optimistic about the
rupee. You have huge problems in India, you have a debt to GDP ratio of over
90%. I am not optimistic about the rupee going forward.
Courtesy economictimes.indiatimes
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