Prominent investor in United States sounds note of caution

Jim Rogers, a well-known US investor and the co-founder of Quantum Fund, says he has deep concerns about the global economy's health over the next three years.

Chinese companies should control both their exposure to Western markets and internal debt, he told China Daily in Hong Kong.

The next year will see "problems and surprises", as the economies of Japan, Russia, Brazil, the United States and Europe will likely get worse, affecting Chinese companies, he says.

Major Western countries are already suffering from the effects of recession, and uncertainty will only deepen next year, he says.

China is the world's largest trading country and will be next to lead the world if trends continue. But as the rest of the world has problems, the country may not be able to avoid a setback on the global front, Rogers says.

China will have to take on the challenge of managing its debt levels at the same time, he cautions, saying that a major fundamental change in the Chinese economy is the increase of debt across the board - for individuals, companies and provincial governments - a far cry from the past.

"There is nothing wrong with debt if you manage it properly," Rogers says. "If you borrowed the money for productive reasons - to build factories, improve efficiency, earn sales, make profits or pay off debts - it's great. But if you didn't, or make mistakes - such as seeking too much expansion - you will suffer."

Rogers says he prefers investing in companies in the business of pollution control, healthcare and agriculture, along with those aligned with the government's program to strengthen ties with countries along the ancient Silk Road.

"I think those companies will do well, no matter what happens," he says. "I am bullish on agriculture everywhere, especially in China, as it has been depressed for 30 years globally."

He says the property market in China appears overpriced and that a bubble may have formed.

"If you want to buy property, go to the farm, the rural areas and countryside," he says.

He believes technology is becoming a significant driver of the economy. Two decades ago, it was the US and Europe that led technology. But now China is set to produce 10 times as many engineers as the US had. In the next couple of decades, it will become a leader in technology, he says.

As for his investment preferences, Rogers says: "I am not buying equities or bonds anywhere, but may invest in agriculture commodities. I own gold but am not buying gold. I'm waiting for its price to fall to buy a lot more."

daunting@chinadaily.com.cn

(China Daily Africa Weekly 10/28/2016 page28)