Friday, August 1, 2014

Jim Rogers wait-and-watch mode on India

I am still in wait-and-watch mode on India: Jim Rogers

What are the chances that the developing geopolitical situation creates a flutter in the world equity and commodity markets that takes investors away from allocating money to riskier assets?

Wars always affect all markets. When there is turmoil or fear, people are less likely to take risk. War is not good for anything except commodities. In such a scenario, people prefer to put their money into commodities like lead, copper or wheat because they know those are necessary for war. Likewise for gold. Thus, war is not good for anything except commodities. It is less bad for the people who win the war but in the meantime when there is uncertainty, people are afraid of investing and taking risk.

Given the geopolitical situation, which regions or economies would you still consider safe from an investment perspective, given the road ahead for the next six to 12 months, and why?

Well, there is no such thing as safe, if you ask me. In the investment world, there is always a risk of everything even if one holds cash. You need to put your money in the right asset. I certainly would think that anything in Africa, South America or even parts of Asia might be safe or considered less dangerous than parts of West Asia. I don’t expect geopolitical problems in Asia but who knows? The future remains uncertain. Politicians, as history suggest, have done very foolish things and probably will continue to do foolish things. So, some parts of Africa and South America appear less dangerous — but no place is absolutely safe.

What about the Asian region?

I don’t really think there are any Asian countries that are absolute safe bets, should Asia break out into some kind of conflict with the Japanese or the Chinese or the Koreans or Philippines. In that case, no place in Asia would be less dangerous.

How do emerging markets appear as an investment destination now, as compared to the developed markets? Which amongst the two is relatively better insulated, why and on what counts?

America, Germany and many other developed markets are near all-time highs and most undeveloped markets are not. I would prefer to invest in places like Japan, that is still nearly 65 per cent below its all-time high. I would rather invest in Japan rather than in New York. China, too, is around 65 per cent below its high levels. I would much prefer to judge each situation based on its own merit and invest in China or Japan, given that they are depressed, rather than Germany or America.

How do you see the Indian economy shaping? How do you evaluate the change of guard at the Centre and the recent policy measures announced by the new government? Does all this encourage you to look at India as an investment destination?

Well, yes. The new government has done a lot of smart things in its previous positions. I am still in a wait–and–watch mode as regards India. The new government still doesn’t control the upper House (of Parliament), so, the Prime Minister can’t do everything he likes and the recent Union Budget really didn’t do very much. India still has a lot of internal problems. Though I am not investing right away, I am keenly watching the developments unfold.

What are your key concerns on India? Have any of those been assuaged in recent months? Are there any policy measures that you would give a thumbs-up to?

The one thing that would make me probably invest in India is if the currency is made convertible and makes it legal and easy for foreigners to invest there. Right now, it is very difficult to invest in India because the currency is not convertible and because it is illegal for foreigners easily to invest there. This is absurd. If India claims where it wants to be – that it is a great economic power, which it could be some day – issues related to currency convertibility, high inflation, debt, ease of investing have to be addressed. So, if the government does something on these issues, I will be very excited about India. You also need to cut bureaucracy. India has the worst bureaucracy in the world and I haven’t seen anything quite like it. If these things change, India could be a very exciting place for me.

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).