Legendary global investor and chairman of Singapore-based Rogers Holdings, Jim Rogers said global equities are vulnerable to correction after rallying for the past 10 months and as governments around the world start withdrawing stimulus measures.
In an interview with Bloomberg in Hong Kong today, Rogers said: “We’re overdue for a correction.”
“Stock markets around the world have been going up for the past 10 months.” Rogers added.
The MSCI World Index climbed 67% from a more than 13-year low on March 9 as governments boosted spending and central banks cut borrowing costs to pull the global economy out of its worst recession since World War II. The index has fallen 4.9% from a 16-month high on January 14.
Earlier this month, China’s central bank reduced credit supplies in the world’s fastest-growing economy. The People’s Bank also raised its yield on 1-year bills by 0.08% — twice the expected rise — and withdrew a one-day record worth US$29 billion in cash from the Chinese bond market.
Rogers, who took a “senior consultant” position with China’s Dalian Commodity Exchange in October, has long been a bull on the nation’s economic outlook. He also moved his family to Asia in 2007 to tap the region’s growth and to allow his children to learn Mandarin.
The legendary global investor told Bloomberg last week that he hasn’t sold any of his Chinese stocks even after last year’s rally. He reiterated that the last time he purchased stocks in the country was between October and November 2008.
Still, the rally in global stock markets means a “consolidation is overdue,” Rogers said. Commodities are a “much better place to be” than stocks, he said.
“I don’t think anybody has tightened enough. I think everybody should tighten more,” Rogers told Bloomberg today. “We have huge amounts of money printed throughout the world. It’s going to cause currency instability. It’s going to cause more inflation. It’s going to cause higher interest rates.”
Jim Rogers has taught finance at Columbia University’s business school and is a media commentator worldwide. He is the author of Adventure Capitalist, Investment Biker, Hot Commodities, A Gift to My Children, and A Bull in China. See his website.