Jim Rogers’s view on Euro, Gold, China and Commodity at Shares Investment Conference. Part 1

Long China/Asia, short US!

That is the one liner take away from the Shares Investment Conference 2012 where Jim Rogers, Mike Bellafiore (Partner and co-founder of SMB Capital) and Avtar Sandu (Commodities expert with Philip futures) shared openly on their take of current macro economic situation and how one should invest in the coming years. This is part one of two articles.

The session started with Jim talking a bit about himself and why he made the decision to relocate his whole family here in Singapore. I didn’t know that he actually traveled the world twice! Once on a motorbike and another time by car. That 2 adventures really enable him to see the world first hand and spot macro trends.

China– He is optimistic about China. why?

• China has one of the highest saving rate in the world. Contrast that with American and European, Chinese are in much much better financial shape to weather any crisis.
• He feels RMB will some day be the world’s currency. A lot of the countries are debasing their currency and some day someone will realized that they can’t go on printing money without any solid backing.
• So…. he is buying Chinese shares on market panic. Only when he sees people damping share, will he  then enter. Once he got them he doesn’t sell them because he is leaving it to his daughters and grand children.
• He is also buying RMB currency. How lay? He say he got his Kangtao to buy for him.
• Action: But for layman in Singapore, we can go to Bank of China to do it. Or buy HKD  as a proxy. He thinks one day HKD will be converted to RMB. But short term have to suffer weakening USD.

Myanmar– He is super optimistic about this country.

• He would put most of his money in Myanmar if he could! He just have not found a way to do it safely.
• Myanmar is one of the most resource rich country in Asia. But because of civil wars, it has not grown much. He paralleled what is happening in Myanmar now to the time when China first started opening its door. So keep eyes open for opportunity.
• My value add: In Singapore we can participate in Myanmar growth via YOMA. But the prices have ran up quite a bit laio. Can consider investment on weakness.

Commodity– He has always been and still is optimistic about commodity. Especially agriculture.

• At macro level, he feels that supply is diminishing and demand is increasing. This is because there are less and less farmers and there are more and more people in the world.
• He cited that in US, there was 200K MBA graduates but only 20K studied Agriculture in a year. Ask any graduates and most likely none will want to get their hands dirty to work in the fields.
• The average age of a farmer in US is 56. Japan is 66.
• Mr Avtar also mentioned that even China is now a net importer of commodity like corn. Currently the inventory for corn, rubber and copper are at very low level. If there is any QE, it will be very good for commodity.
• Jim’s famous quote “Farmers are going to be driving Lamborghinis and traders driving taxi” sums up his view very well. 🙂
• Action: To participate, Singapore investor can look at various agriculture based ETF in the market. Or invest in his index call Rogers Intl Commodity Agri (RJA). 

Side track:There is lady in the audience that works in a agriculture/farming company. She laments that the profit margin in this business is extremely low when compared to other luxury industries. Part of the reasons is because Government tends to step in when food prices goes up. They will arm twist producers to accept lower prices so they can score political points back home. Jim encourage her to continue in the business because one day the politician will run out of options and have to yield to high prices. He even joked if the lady have any sons, if so will introduce his daughters to her. Funny!

In the next post, i will talk about their views about stock markets, Gold, Silver, Euro and more.