Commodity bull Jim Rogers says hedge fund managers such as Jim Chanos of Kynikos Associates and Hugh Hendry of Eclectica, who have been shorting Chinese related stocks and credits, have got it wrong. « Those guys have been dead wrong for two years. Chanos said two years ago he was shorting China and it’s going to collapse, » Rogers told CNBC. « I know Jim and I like Jim and admire Jim but he’s been dead wrong for two years, I hope he’s still solvent. If he did the things he said he’s doing, he’s losing a lot of money, » Rogers added.
Rogers isn’t disputing that China could see a slow down, but he doesn’t think it’s going to be severe. He said he doesn’t plan to sell his China shares and expects to pass them on to his grandchildren one day. « Every country, every family, every individual has setbacks as they rise. China is going to have some horrible setbacks. America had unbelievable setbacks as we rose, » he said. Rogers said he is long on the yuan and hadn’t bought China shares since November 2008, but he added that if China stocks were to collapse, he would add to his positions. Despite being such a bull on China, Rogers admits « urban, coastal real estate » in China is in a bubble, but unlike Chanos, he doesn’t think the correction will bring down the economy. « China is entirely different. You cannot buy 4 or 5 houses with no money down and (without a) job like you could in the U.S. » Rogers, who’s been visiting China since 1984, said the country has always been overbuilding. « So what if a bunch of guys, the real estate speculators in Shanghai go bankrupt, that’s not the (entire) Chinese economy, » he added. Rogers thinks many parts of the Chinese economy such as water treatment, agriculture, infrastructure and tourism will continue to boom even after a major property correction.
Long Commodities, Short Stocks
As a result, he remains long on commodities and thinks they will continue to do well whether the global economy faces fair or rough weather. « If the world economy gets better, you’re going to make money in commodities because of the shortages. If the world economy does not get better, you’re going to make money in commodities because then they’re going to print money, » Rogers said referring to central banks in the developed world. To protect his bullish commodity and currency positions, he’s shorting emerging market stocks and American technology stocks. « If that scenario [China hard landing] takes place, you are not going to make any money on Toyota, you’re not going to make money on IBM. The stocks will go down a lot. »