Rogers expects unification to make Korea a greater force


China will dominate the 21st century.

The economic policies, particularly monetary policies, pursued by the U.S. are hastening its decline.

Commodities, not stocks or bonds, are the smart investments now.

This is what American investor and author Jim Rogers has been saying for several years now, and it was the message he brought with him Thursday to the 2011 Seoul Global Financial Conference.

“China is the next great country whether we like it or not,” he told his audience at the Shilla Hotel in Seoul. “The 19th century was the century of the U.K., the 20th century was the century of the U.S., and the 21st century is the century of China.

“They call themselves communists, but let me tell you they are among the best capitalists in the world.”

The U.S.-born Rogers is well-known in international finance through his co-founding of the Quantum Fund in the early 1970s. Following that fund’s enormous growth, Rogers “retired” in 1980 to spend time writing, speaking and teaching about finance, as well as traveling around the world.

In 2007 he moved to Singapore, saying that the time was ripe to start investing in Asian markets and begin gravitating away from the West.

“As recently as 1987 the United States was a creditor nation, now the United States is the largest debtor nation in this history of the world,” he said.

“My little girls are American citizens … ” he went on. “My little girls do not have bank accounts in America. My little girls have their bank accounts in Asia.”

A big part of why he has pulled away from his country of birth is because of its recent actions, and Rogers had very sharp words for Ben Bernanke, chairman of the U.S. Federal Reserve.

“The head of the central bank in America is a man who does not understand economics. He does not understand currencies,” Rogers said. “He only understands printing money.”

Rogers said he still owns some U.S. dollars, but only because the currency has been so devalued that he expects it to rally, after which he plans to sell.

On more than one occasion during his speech, Rogers said that most of what his audience had learned about investing over the past few decades is “no longer valid,” particularly with regard to stocks and bonds.

“I would urge you if you own bonds, bonds in nearly any country, to go home and sell them, unless they’re special situation bonds, or unless they’re some kind of short-term bonds,” he said.

“If any of you happen to be bond portfolio managers, I would get another job, because you’re in the wrong place at the wrong time,” he said, drawing an awkward round of laughter.

Rogers said that his own portfolio contains few stocks, instead favoring commodities and foreign currencies. This, he said, helps him stay prepared for the changes he sees ahead, including social unrest, rising food prices and commodities shortages.

“If you’re prepared for (these changes), you’re going to make huge fortunes,” he said.

“You’ve got to learn about silver and rice and natural gas, because this is where the fortunes are going to be made in the future.

“For those of you who don’t know, commodities have done 10 times better than stocks in the U.S. over the past 10-12 years … and yet most people are still sitting around babbling about stocks and bonds,” he said.

Rogers spent about the last 15 minutes of his allotted speaking time answering questions from the audience. When asked how to best keep informed of worldwide trends, Rogers said that they should read as much as they can, from a variety of sources around the world and try to piece the information together.

“Don’t just read the Korean press, don’t just read the American press,” he said. “You have to understand, most governments lie.”

Some of his remarks, particularly when taking questions, were tailored to his audience, particularly on the subject of Korean unification.

“In my view there’s going to be a merger in the foreseeable future,” he said. “And when that happens, Korea is going to be one of the most exciting countries in the world, because in the South you have a large population, huge assets and lots of managerial ability. In the North they have very cheap and disciplined labor, and lots of natural resources.”

This unified Korea, located on the Chinese border, would “run circles around the Japanese,” Rogers said.

He said he had many reasons for believing unification would come soon, but did not elaborate on that point during the speech.

One audience member asked him about the possibility of social upheaval in China, as more people begin demanding greater rights. Rogers said he has begun to see this already, but indicated that it does not change his view of China’s future.

“There are people in Asia who say that the Asian way is to become prosperous, and then you open up your economy, and then you open up your political process and then you become democracies.”

He cited South Korea, Taiwan and Japan as examples of this.

Rogers also addressed the problem of Korea’s low birthrate, drawing upon his own experience. The investor, now 68, has two daughters, the first of which was born in 2003.

Though he originally never planned to have children, he said becoming a father has changed his life and encouraged his audience to do the same.

“I want to tell you that if there’s anybody in this room who hasn’t had a child yet, I urge you to get home and get on with it,” he said. “It’ll be good for you and for Korea.”

Rogers is the author of five books, including “A Bull in China: Investing Profitably in the World’s Greatest Market” and the latest, “A Gift to My Children: A Father’s Lessons for Life and Investing.”

The 2011 Global Financial Conference, held by the Hankyung Media Group, took place March 9-10 at the Shilla. Other speakers included former Prime Minister of Sweden Goran Persson and William Donaldson, a member of U.S. President Barack Obama’s Economic Advisory Panel.  

By Rob York (rjamesyork@heraldcorp.com)