Wednesday, July 3, 2013

Jim Rogers on investing in Malaysia, the century of Asia, & frontier markets


Is investing in Malaysia a good way to capitalize on ASEAN growth?

ROGERS: Malaysia has a few things going for it now. It has a government that understands how the world is supposed to work and it is trying to open up so that if people accomplish something they can see the fruits of their labor. They have lots of natural resources, are right in the middle of the region, and speak multiple languages, so Malaysia has a lot going for it. I would not have always said that. I have had criticisms of Malaysia in the past, but at the moment, I have investments in Malaysia for the first time in a long time.

I first came to Malaysia to make investments in 1985, so I have been involved one way or the other for nearly 30 years. At times I have been very pessimistic about Malaysia. At the moment, partly because of the new government, which is taking a very open approach to Malaysia and to the world. This is a government that understands economics better than some governments, has big reserves, has huge national resources, and has a very large agricultural component of their economy, and I am extremely optimistic about agriculture. Malaysia is right here in the middle if ASEAN and I am optimistic about what is happening in ASEAN. They have this neighbor called China as well. They are multicultural, which sometimes has been a negative here, but they have multiple languages. There are a lot of things going on in Malaysia that, for me anyway, means it's time to start thinking about or investing in Malaysia again - and I have by the way, I do have investments in Malaysia which I made about 2-3 years ago because I saw what the new government was trying to do. So I am more optimistic about the future of Malaysia. There are problems everywhere, but there are many reasons to be thinking about investing in Malaysia now.

How do you see Malaysia's plantation industries positioned?

ROGERS: One of the sectors of the world that I am most confident about and optimistic about is agriculture. If you get tired of doing broadcasting, you should head off and become a farmer. One of the great strengths that Malaysia has, which most people do not seem to pay much attention to, is agriculture. That is one of the reasons I am most optimistic about Malaysia.

Are you invested in palm oil?

ROGERS: Indirectly, I own an agricultural index, which includes palm oil futures. I do not own palm oil itself. The reason for that is my lawyers will not allow me to buy individual commodities because I am always writing about them and talking about them, so I invest in commodities through the Rogers Indexes, one of which includes palm oil.

To what extent do political implications hold commodities back?

ROGERS: Fortunately or unfortunately, depending on which side you are on, there are always people scrutinizing everything. Whether it is Microsoft or palm oil or whatever it happens to be. It goes with the territory. Whenever somebody interferes with something it impedes the growth of that industry - and maybe it should be impeded. I do not happen to think there is much wrong with palm oil. It provides jobs and income for a lot of people. But, there are other people who disagree and that is part of the game, no matter what the game is. If you are selling Coca-Colas on the street corner, somebody is going to come along and complain.

Where do you see opportunity in frontier developing markets?

ROGERS: Well, the assets right now are in Asia. The largest creditor nations in the world are China, Korea, Japan, Hong Kong, Singapore, and Taiwan. This is where the money is. Malaysia has big reserves for its size. A lot of countries have big reserves in Asia. You do not have gigantic debts in Asia. If you look out the window, you can see where the debts are. Go East or West, depends on which way you want to go, and you will see a lot of debts in Europe and America. I moved to Asia because I want my children to grow up in Asia because this is the century of Asia and I want them to be here. Now there are some great opportunities. Many of the ASEAN countries are going through big changes, Malaysia, Indonesia, Myanmar, my goodness what is going on in Myanmar. So most of the good opportunities will be in Asia. Korea I find very exciting, or what is happening in South Korea anyway. Russia to my astonishment. I was bearish on Russia between 1966 up until recently. So there are plenty of opportunities. In Angola there are great things happening, Tanzania, and Ethiopia. There are places in the world where things are getting better, but unfortunately for the world, the largest economies in the world are having problems, and that means everybody will suffer.

What is the best way for people living in places that do not have the brightest outlooks to protect themselves?

ROGERS: Move. No, the best way you can protect yourself is to learn about what is happening outside your own country, whatever your own country is. By the way, everybody should have some investments outside their own country as an insurance policy. Even if you live in the best country in the world, have some money somewhere else just in case. You have your health insurance policy, have a country insurance policy. There are great opportunities taking place in many parts of the world, so you should take some time learning about those investments. Many countries are going to go through the ringer in the next decade and you need to protect yourself in case you happen to have your assets in one of those countries. I am not the least bit optimistic about the US and these other places in the coming decades, so you need to have diversification and protection.

Jim Rogers is a bestselling author, financial commentator and successful international investor. Rogers was a co-founder of the Quantum Fund (considered to be the first truly international fund of its kind) and is the creator of the Rogers International Commodities Index (RICI).