The Investment Outlook in the Indo-Pacific: An Interview With Jim Rogers

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The Investment Outlook in the Indo-Pacific: An Interview With Jim Rogers

The co-founder of the Quantum Fund discusses the region’s best investment opportunities.

The Investment Outlook in the Indo-Pacific: An Interview With Jim Rogers
Credit: Pixabay

What is the current investment outlook in the Indo-Pacific region, and where are the best investment opportunities? For a perspective on these matters, Jongsoo Lee interviews Jim Rogers, a noted American investor based in Singapore and the co-founder, with George Soros, of the Quantum Fund.

What are the big macro trends affecting the investment outlook in the Indo-Pacific region, and how can investors take advantage of these trends?

The main macro trend in the 21st century is the shift from the West to the East. The 19th century was the century of the United Kingdom, the 20th century was the century of the United States, while the 21st century is going to be the century of China and of Asia. It is happening; these things do not happen overnight. It will not be straight up, and there will be problems along the way. America became the most successful country in the 20th century, but, along the way, we had many depressions, a horrible civil war, and very little rule of law… However, despite problems, we became very successful. That is what is happening in Asia now. There is a shift in Asia. There are more than 3 billion people in Asia, and most of them are creditor nations. The Western nations are huge debtor nations now. So, the energy drive is in Asia now…

In what ways is the current COVID-19 pandemic a crisis or an opportunity for investing in the Indo-Pacific region?

As you know, many parts of the world economy, including that of Asia, have been crushed. Anything having to do with transportation, travel, and tourism has been ruined. I live in Singapore. Well, the Singapore airport is basically closed. Airlines, hotels, restaurants, etc., are not making much money. So, that leads to an opportunity because, in my view, we are going to fly again someday. We are not going to take boats from Singapore to London or New York. We are going to take airplanes again. We will stay in hotels. Ships will go again. So, there will be opportunities in the disaster which is taking place.

As of now, what are some of the best investment ideas or opportunities in the Indo-Pacific region? Can you name some specific countries, economies, industries, companies, or investment products?

As I mentioned before, anything to do with travel and tourism is being crushed. I bought shares of a Russian shipping company recently, and I bought shares of Chinese wine companies. People stopped going to restaurants, bars, etc.; people stopped doing anything. I bought Japanese ETFs recently because the Japanese government is buying ETFs since everything got smashed so much in Japan. I bought some airline shares in Asia recently. So, these are some of the things I am doing specifically. I also bought gold and silver. I stopped buying gold and silver in 2010. I started again in 2019 because all the countries in the world are printing so much money, so I bought gold and silver again, and when they go down, I will buy more. I will buy more in the next year or two, who knows?

Can you tell us about some of the investments you have made in the Indo-Pacific region and the rationale behind these investments? What have been your best investments and your worst investments?

My best investments: I have two daughters. And when they were born, I started making sure they learn Mandarin. We moved to Asia so that they would know perfect Mandarin and would know Asia because in their lifetimes Asia is going to be the most important part of the world. So far, it has been amazing. I speak no Mandarin. Their Mandarin is so good that the Chinese invite them to Beijing to put them on TV shows. So, that has been my best investment so far. These girls know Asia and they speak perfect Mandarin. That will not make them a success, but it will certainly give them a leg up in the 21st century.

My worst investments: I made many mistakes… I first went to China in 1984, and I was terrified because, all my life, American propaganda had said that the Chinese were evil, vicious, bloodthirsty, dangerous people. It did not take me long to realize that that is wrong, and that China is on the rise again. If I had really been smart, I probably would have stayed in Asia much sooner.

Has the current tension between China and the U.S. created investment opportunities? If so, what are those opportunities?

Any kind of tension and turmoil leads to some opportunities: some people suffer, and some people prosper. The simple answer would be what I said before: travel, tourism, and transportation because these tie in with the virus. There were sanctions and quarantines, so that has led to opportunities…

I am a student of history, and I know that trade wars and sanctions have never worked for anybody. Nobody wins trade wars. Probably the most important lesson of history is that nobody learns the lessons of history… People don’t know history, and they think they are smarter than history… One more thing: When Mr. Trump first became president, he pulled America out of the Trans-Pacific Partnership, which is a huge trade development in Asia. Mr. Trump is making China great again because all the Chinese and the Asians said, “What do we do now?” They all said, “Well, we have to turn to China because America has pulled out.” So, it is giving China even more status and influence in Asia because America has turned its back at least partially on Asia.

What are your views on the potential for investment in North Korea? What type of investment is currently possible and what type of investment will be most promising once sanctions against North Korea are lifted?

Once the DMZ opens, the Korean peninsula is going to be single most exciting part of the world for 10 or 20 years. North Korea in 1970 was richer than South Korea. North Korea has a lot of natural resources and lots of cheap, educated, disciplined labor right on the Chinese border. Now, there is nothing I can do about that. I am an American citizen. So, I am not allowed to invest in North Korea, but other people are. The Chinese are pouring; the Russians are pouring in there. America is shooting itself in the foot because it is leaving the opportunities to everyone else. And we poor American citizens cannot do anything. South Koreans cannot do anything, the Japanese cannot, but other people can and they are.

So, once the DMZ opens, you are going to have the Korean peninsula on the Chinese border: a country with 70 or 80 million people, with lots of natural resources and cheap disciplined labor in the North, and huge amounts of capital, management, and manufacturing know-how in the South. It is going to be an extremely exciting place. China is for it, Russia is for it, North Korea is in favor, and South Korea is in favor, but Japan is against it, because Japan knows it cannot compete with an open Korea, but there is not much they can do to stop it.

The main problem, of course, is the American army. America has 30,000 troops in South Korea, and if you look at the map, there is no place in Asia where America can keep troops on the Chinese border and the Russian border. The American army does not want to leave. I am an American taxpayer, so I want them to leave. I don’t know what we are doing in the Korean peninsula 70 years later. But they don’t care what I think. So, once the Koreans can sort out the problem with the American army, it is going to be an extremely exciting place.

You are based in Singapore. What do you like about being based in Singapore? And what is your view on Singapore’s future, especially given the recent crackdown in Hong Kong?

Singapore has been one of the most successful countries in the world in the past 40 or 50 years. It was a swamp 50 years ago with half a million people. Now, it is unbelievably successful with 5.5 million people. I can give you a scenario that, 50 years from now, it is going to be even more astonishing. I can also give you a scenario that it is going to be a disaster. But at the moment, we are very happy living here. What has happened in Hong Kong probably is not going to hurt Singapore. For many people who are thinking of relocating or putting a company in Asia, Hong Kong is not on the list anymore for all the reasons that have happened. This means that the list is shorter and that Singapore is an obvious beneficiary of the fact that Hong Kong has been taken off the list. Hong Kong is not going to disappear. It is just that any future dynamic growth is finished, and that leaves Singapore, Shenzhen, and a few places. Singapore is a major beneficiary of that development.

What about Southeast Asia, especially Vietnam? Has the current tension between the U.S. and China had a positive effect on Vietnam as a country offering investment opportunities?

From what I read, yes. I do have a few investments in Vietnam. Vietnam is still a cheap and efficient place to do business… 90 million people on the Chinese border with lots of natural resources and educated people… Yes, I see opportunities in Vietnam.

Do you have any other comments on investment opportunities in the Indo-Pacific we haven’t touched on?

I mentioned Russia in passing. I have bought a Russian shipping company, and I have shares in Russia. Mr. Putin has determined to make the Russian Far East near the Pacific Ocean a very important and dynamic area. He is putting huge amounts of money into Vladivostok, which is the port out there… He has rebuilt railroads into North Korea. So, the Russian part of Asia is a very dynamic and exciting place to be. In my view, Vladivostok is going to be one of the three or four most exciting cities in the world in the next 20, 30, or 50 years or so because of all the money being put there and because of the opening of North Korea, South Korea and China. So, I would urge people if they don’t know about Russia or Siberia or the Pacific Far East, that they should learn. There are shares you can buy if you are a stock market investor, or you can move there! There would be great opportunities.

Jongsoo Lee is Senior Managing Director at Brock Securities and Center Associate at Harvard University’s Davis Center for Russian and Eurasian Studies. He is also an Adjunct Fellow at the Hawaii-based Pacific Forum. He can be followed on Twitter at @jameslee004