Tags: Sell | Emerging | Markets

Rogers: Sell Emerging Markets

Monday, 02 Jul 2007 03:39 PM

Top commodities expert Jim Rogers said in an interview with Bloomberg that — with the exception of China — he has sold nearly all of his emerging markets holdings, calling them "over-exploited."

"I've sold out of nearly all the emerging markets," Rogers, chairman of New York-based Beeland Interests Inc., tells Bloomberg. "Right now, as we speak, there are probably 10,000 young MBAs on airplanes flying around from one emerging market to another."

"They're all over-exploited, so I've sold out," explains Rogers. "I didn't want to sell any of them. I'm hoping when the next big correction comes I'm smart enough to buy some of them back."

"The only one I didn't sell was China," Rogers continued. "I don't ever want to sell China, but if China doubles again this year, then it's a full-fledged bubble and I'll have to sell."

We too have been questioning whether equity prices in emerging markets will be able to continue their bull market up-trends. Both the Shanghai and Mexico Bolsa indices have thus far been unable to break up through their mid-June highs and have been trending lower over the past few weeks.

Meanwhile, inflation statistics in India suggest that possible interest rate hikes there could lead to a significant market correction in Indian equities later this year.

Although trade between Asia’s emerging economies has increased significantly over the past few years, countries such as South Korea, Malaysia, Singapore, China, and India still depend heavily on the U.S. for the bulk of their exports.

In addition, exports account for a significant percentage of those countries’ GDP. Hence, if economic growth continues to slow in the U.S., we think growth in the world’s emerging economies could also slow considerably.

Through the end of June, the Morgan Stanley Capital International ("MSCI”) Emerging Markets Index had risen approximately 15 percent, while the S&P Index had advanced only 6 percent.

However, with a beta coefficient of approximately 2.9 between the MSCI Emerging Markets Index and the S&P 500 Index, we think stock prices in the world’s emerging economies may also decline at a much faster rate than in the U.S., in the event of a market correction here. (The beta coefficient is a measure that shows the relationship between two stock market indices).

Rather than committing his capital to stocks or bonds, Rogers also said that he is holding long positions in about 20 agriculture commodities.

"I'm long nearly all agricultural commodities — about 20 of them — because that's the place to be," commented Rogers. "It's better than the stock market, the bond market, or any other market. Dramatic fundamental changes are taking place for the better. And it's one of the great places to make money in the next few years."

In the upcoming issue of Financial Intelligence Report (Go here to order the report now), we identify the top commodities for the coming year and tell you how to profit from them.

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DavidFrazier
Top commodities expert Jim Rogers said in an interview with Bloomberg that — with the exception of China — he has sold nearly all of his emerging markets holdings, calling them "over-exploited." "I've sold out of nearly all the emerging markets," Rogers, chairman of New...
Sell,Emerging,Markets
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2007-39-02
 

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