Investors monitor stock price movements at a brokerage in Changchun, Northeast China's Jilin Province July 26, 2007. [newsphoto]

SHANGHAI - 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."