Taking the establishment of the Shanghai Stock Exchange as the starting point, on December 19, 2020, China’s capital market has been officially established for 30 years. Over the past 30 years, China’s capital market has been constantly reformed, innovated and developed and strengthened, and today it has become one of the most important financial markets in the world.
At this special historical node, The Paper released the special topic “The Power of the Market” and interviewed 30 iconic figures of China’s capital market. Looking back at the major historical moments in the development history of China’s capital market in 30 years, and looking forward to the development prospects and direction of the next 30 years.
As one of the world’s three major investment masters, as well as Buffett and Soros, Jim Rogers has a long-standing reputation. He is a Wall Street figure, is known as the most visionary international investor, and one of the most successful practitioners in the U.S. securities industry.
However, slightly different from the top two, Jim Rogers has been bullish on China many years ago and has long held Chinese stocks. Its views were once doubted, but were eventually proved to be forward-looking predictions by the market. Over the past three decades, China’s economy has taken off rapidly and grown into the world’s second largest economy. China’s capital market has also developed rapidly, becoming a place for domestic and foreign capital to compete for more holdings.
For many years, Jim Rogers’ affection for China has been a champion of China’s economy and culture. He regarded Confucius as his tutor and expressed his admiration for Deng Xiaoping’s reform and opening-up measures on many occasions. He has also visited China countless times in decades and established close and special links with China’s capital market.
On the occasion of the 30th anniversary of the establishment of China’s capital market, The Paper asked Jim Rogers to share his observation and perception of the development and changes of China’s capital market over the past 30 years to provide a foreign and international perspective for the development of China’s capital market.
The following is a transcript of The Paper’s conversation with Jim Rogers:
When did you first come to China? What about the first time to go to the China Stock Exchange? What did the exchange look like at that time?
Jim Rogers:
In 1984, it was my first time to go to China. At that time, I wanted to invest in China, but there was no exchange.
A few years later, I first came to Shanghai to see the exchange. At that time, I walked a section of dirt road and then entered a small building. There was a counter. A lady checked out with abacus at the counter.
The people inside told me that I was the first foreigner to go there to see. At that time, everyone was using abacus, which was very interesting.
Since then, I have been to the Shanghai Stock Exchange two or three times, and each time has changed a lot. There are many more people on the Shanghai Stock Exchange. Everyone is using computers. Now people don’t have to go to the stock exchange, because all transactions can happen on computers.
Now the Shanghai Stock Exchange has developed into the top three stock exchanges in the world.
You have visited China many times before. What do you think is the biggest change in China and its capital market?
Jim Rogers:
God, China now and I saw at the beginning are simply two different countries. When I first went to China, there were no cars, few hotels, few restaurants, and almost nothing. Now, it is one of the most exciting countries in the world, prosperous.
China’s former capital market was very small, with few companies and few investors. But now there are countless companies and investors. At that time, no one knew what a stock exchange was, and now many people were involved in investment.
However, at present, China’s stock exchanges are still not open to countries such as Germany, Japan or the United States. It is not easy for foreigners to buy stocks.
Have you paid attention to the reform of China’s capital market in the past 30 years? Which impressed you?
Jim Rogers:
Of course, everything China has done has been very important to me since I invested in China.
In fact, every time China opens up to the outside world, I am impressed. Deng Xiaoping is a genius. 40 years ago, he opened up China. To some extent, opening up is the greatest achievement of China or China’s capital market in the past three decades. It is beneficial not only to China, but also to the whole world.
I remember, Deng Xiaoping once said that if you open the window, flies will fly in, but at the same time you can also get fresh air and sunshine. I think the more open the better. Of course, China still has a long way to go.
China’s stock market has experienced six bull markets and four crashes. You must have paid attention to it. Can you talk about what you saw at that time?
Jim Rogers:
Of course, I have invested in China for 30 years. I remember that China experienced a stock market disaster in 2007. My impression at that time was that there was too much bubble. Everyone is investing, and the stock price is inflated.
There was also a huge bubble crisis in the United States in 2008. One of the reasons for the bubble was that the United States used too much debt. The second was that the stock price was too high. Finally, the bubble burst and the market crashed. Subsequently, the government tried to reduce the amount of funds in internal circulation.
Now governments all over the world are printing a lot of money. I think when they stop, investment markets around the world will face huge problems.
It seems that you have bought more B shares in China. Have you bought Chinese A shares? What’s your opinion on the A-share market? How to evaluate the gap between China’s A-share market and mature capital markets?
Jim Rogers:
I own A shares. The development of China’s A-share market is becoming more and more open. China has more and more investors, the economy is getting better and better, and the companies are getting stronger and stronger.
I am very optimistic about the future of China’s economy and the stock market, and I will also hold more Chinese stocks. Of course, we sometimes experience market decline, but this is the normal performance of the economy.
As for the gap, more than 50% of Americans in the United States have one or more investment accounts. In China, less than 10%. This means that a small proportion of Chinese people invest in stocks and even know the stock market.
However, it is not to blame China. After all, this is a new thing. The capital market has developed in China for a short time, only 30 years. Think about it, the capital market of the United States is 200 years old, and the United Kingdom is also 500 years old.
In the future, more and more Chinese will learn about stocks, enter the capital market, and then have investment accounts not only in China, but also in many countries, which will become inevitable.
Which assets of China do you like? Which stocks are invested in?
Jim Rogers:
I recently bought some Chinese liquor stocks. In addition, I think the tourism industry, airlines, have opportunities.
While the coronavirus has been making these stocks fall over the past, sometimes crises mean opportunities, and economic recovery will bring opportunities for travel, aviation, hotels, restaurants, etc.
In addition, I also pay attention to agriculture. I noticed that Beijing is trying to develop agriculture, so I would like to look for China’s agricultural stocks.
I always like to look for opportunities in crises. The market is falling. Maybe it’s the time for me to take action.
I usually stay away from companies that are heavily indebted. In addition, I will pay attention to what the government does, especially in China. When the government spends money on a certain sector of the economy, that sector will benefit. I will identify such opportunities.
For example, the Belt and Road Initiative, which will make many companies make money, and I find the investment target in it.
China’s stock market has long been known as a “policy market”. The government’s decisions have a great impact on it. What do you think?
Jim Rogers:
In my opinion, the government should let go to the market and let investors decide how to invest for themselves. Then China will have a better economy, a better society and a better stock market.
Of course, the market also needs laws and rules. For example, it is necessary for China to try to control its debt recently, because the debt is not solved to do a lot of harm to the economy.
You predicted a new round of global economic crisis in 2020. Sure enough, this year we encountered the COVID-19 epidemic and the world was in crisis. What was the reason why you made this prediction at that time? Now how long do you predict how long we will take us to get out of this crisis?
Jim Rogers:
My prediction at that time was based on the high global debt, especially the United States, which is now the largest debt in world history. No country in the world has ever been so deeply in debt.
Of course, China also has debts now. It didn’t have it 20 years ago and now.
Now that the United States has a new leader, the new government will still like to print money, like to spend money, and have looser policies, which may be good for the economic recovery next year, but it will have a very bad impact on the future. My daughter is only in her teens, which is not good for them. Now that the United States benefits from the elderly, young people will be burdened.
How long do you think it will take you out of the crisis? I think China is already out of this crisis, and the United States is still in crisis, and it seems that it will not be able to get out until 2021 or even 2022. Obviously, China has done better than other countries this time.
However, the world is now a community. If other countries have problems, China, as the world’s second largest economy and a huge trading country, will also have problems.
So, what are the advantages of China’s economy and capital market in the world in the future?
Jim Rogers:
Because China is the world’s second largest economy and one of the largest capital markets in the world. Therefore, everyone needs to understand China’s economy and the Chinese market, not just the Chinese people. Everyone needs to learn to invest in China, because it is very important to the world.
Some parts of China’s economy work very well, such as technology. China graduates about 10 times as many engineers as the United States every year. Some of them are bad engineers, but some people have jointly created great companies such as Alibaba and Tencent.
In addition, China is also vigorously developing agriculture, and many fields we should know.
What data has you relied on since you been bullishing on China many years ago?
Jim Rogers:
China is the only country in the world that has risen many times. Egypt was great, Rome was great, and Britain was glorious, but China has experienced many highlights in history. China has fallen many times, but each time it is at a low point for a period of time, it can stand up again and create a peak. No other country in the world can do this.
And there are many well-educated aspiring people in China who work hard, save money and work for the future. There are many such people in other countries, but there are more in China.
For whatever reason, China is rising.
What do you think of the performance of RMB this year and the future prospects?
Jim Rogers:
The Chinese government said it was vigorously promoting the free convertibility of the RMB, and I hope this promise can be truly realized. China’s powerful economy needs a very strong balance of payments, so the RMB will become a very powerful currency.
How to look at the trend of U.S. stocks?
Jim Rogers:
The U.S. stock market has been hitting new highs. It has never been higher in history. For me, the U.S. stock market is not a very attractive place because it is so high. I would rather invest in China, Japan or other countries.
If you are given some investment advice to investors? What would you say?
Jim Rogers:
I don’t think people should listen to someone’s advice easily. Whether from the Internet or TV or newspapers, people should invest in what they know.
For example, I told you that I invested in Chinese airlines, but if you don’t know airlines, you don’t invest. If you want to be a successful investor, you need to know what you are doing.
I heard that your daughter speaks Chinese very well. Have you taught her how to make some investments?
Jim Rogers:
Not yet, but once they are interested and want me to teach her, I will spare no effort to teach them all. If people are not interested in something, you don’t teach them. That’s not good to learn.
