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Jim Rogers cautiously bullish on China stocks

(Reuters)
Updated: 2007-07-27 14:23

China's stock market is dangerously high but environmental protection,
water, railways and renewable energy stocks are still worth holding, fund
manager and investment author Jim Rogers said on Thursday.

Rogers, in a presentation at a conference, also reiterated his view to
dump dollars and bonds and stay bullish on commodities, such as oil and
aluminum. Gold was still going strong, but copper prices look stretched,
he added.

A prominent China bull, Rogers said investors should be cautious after
China's benchmark Shanghai composite index quadrupled over the past two
years.

It closed at a record high on Thursday.

"The stock market is going through the roof over the past three years.
That's always a dangerous sign," said Rogers, who co-founded the Quantum
hedge fund with billionaire investor George Soros in the 1970s.

"And if you are new to the stock market, you probably think this is the
way that things always work. This is not the way the market always
works," he said.

"I'm not suggesting you sell your stocks. But I want you to know this is
not usual," he said, adding that some Chinese shares were going to
collapse as they were "crazily priced."

But Rogers sees opportunities in Chinese companies involved in sectors
such as environmental protection, water, green energy, railways and
education, where the government and public were expected to spend a lot
of money.

"I'm not selling my Chinese shares. As I said, I bought more of them last
week. If the market triples again in the next year I would probably have
to sell my Chinese shares," said Rogers, who bought his first Chinese
stocks in 1999.

Rogers, 64, urged investors to get exposure to the Chinese currency, the
renminbi , and dump the U.S. dollar, which he calls "a terribly flawed
currency" as the United States is deep in debt.

"Renminbi is going to be one of the strongest currencies for many years
to come," he said.

Bonds around the world are headed down and that trend would also continue
for many years to come, he said.

"If you invest in bonds anywhere in the world, sell it," he said. "If you
invest in shares, think of Asia," he added.

Commodities such as oil and metals are expected to stay strong for many
years, driven by supply and demand, Rogers said.

He said he favored aluminum over copper right now because copper prices
had shot up, and said property in China is getting expensive.

"I will not buy in Shanghai or Beijing at the moment."

(For more biz stories, please visit Industry Updates)

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