From an interview with Jim Rogers in the May 6, 2002 issue of Barron’s:
“The 21st century is the century of China,” says Rogers, noting it has the second-largest foreign-currency reserves in the world and a population of 1.3 billion. “Everybody should teach their children and grandchildren Chinese.”
He opened an account in Shanghai in 1999 and bought a basket of “B” shares, the shares of Chinese industrial companies allotted to foreigners. “Haven’t sold a one, and don’t plan to sell a one,” he asserts, adding that Shanghai is the place he would most like to move to and may do so for “a year or so.”
“There is no question China is going to dominate all of Asia and the whole world eventually,” he says. China’s dynamism in the region is evident in the vast expanse of Siberia that lies west of China. The Chinese are moving in, opening businesses and leasing farms supported by Japanese capital, attracted by Siberia’s abundance of raw materials. China supplies what it is rich in, labor. Rogers contends the Chinese eventually will “reclaim” Siberia.
And this, from a cover story on Rogers in the June 5, 2006 issue of Barron’s:
China is now the No. 1 consumer of copper, steel and iron ore, and No. 2 in the use of oil and energy products to feed its industrial maw, which is growing at a prodigious rate of nearly 20% a year. And the torrent of textiles, refrigerators, color TVs and computers aren’t just flowing to overseas outlets like Wal-Mart. Burgeoning economic growth is also creating a Chinese middle class aspiring to better meals and more creature comforts. In Rogers’ view, it’s delusional to deny that competition for commodities will continue to heat up as a result of China’s pell-mell rush from a peasant economy to economic giant. Today, there are only 30 million private vehicles on the roads in China, versus 235 million passenger vehicles in the U.S., even though China has almost 4½ times as many people.
So far, the scramble for natural resources has mostly affected energy and metal prices. But Rogers thinks the price boom will soon spread to “soft commodities” (like cotton, sugar, coffee and wool), rubber, lumber and — perhaps most telling — grain and oilseeds. Already, lots of corn and sugar production is being siphoned off into ethanol output.
“Future Chinese demand under their ‘People First’ campaign will be enough to push up prices in these sectors,” he says. “In some grains, for example, stocks are beginning to tighten despite global bumper crops in recent years and an absence of major droughts. Despite low per-capita soybean, meat and chicken consumption by worldwide standards, China is already a major importer of soybeans and other grains and figures to get even bigger as diets improve.”
In the summer of 1998 when Rogers, wary of the then-roaring U.S. stock market, concluded that the future lay in commodities and developed a proprietary index of 35 of them, each with a futures market. They were weighted in line with his view of their relative importance in global industrial and food consumption.
Thus, he included azuki beans and rice in his grain and oilseed category, comprising in all about 20% of what was grandly dubbed the Rogers International Commodity Index, or RICI. Other commodity indexes ignore them. The Rogers Energy sector (crude, heating oil, unleaded gas, etc.) was assigned a weight of 44%, far lighter than the more price-sensitive weighting of over 65% that energy recently commanded in the popular Goldman Sachs Commodity Index. Industrial metals, from aluminum and copper to zinc and tin, have a 14% rating, nearly double the 7.1% weighting given precious metals. The latter is an indication that Rogers is hardly a gold freak. Finally, the index is rounded out by the afore-mentioned soft commodities and livestock.
The RICI was born on Aug. 1, 1998.
Now that was some spectacular timing.
Click to enlarge (Rogers International Commodity Index, Monthly Chart since Inception)
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