David Oliver_

A Bull In China: Jim Rogers' Latest Book on China's Growing Importance

Perhaps you should also read this FT book review. Mr Rogers may not be all he seems.


New market proves difficult to corner

By Jamil Anderlini

Published: January 10 2008 02:00 | Last updated: January 10 2008 02:00

On this Chinese version of the board game Monopoly . . . it's not a roll of the dice, but a corner on the best information, that will help you pass 'Go'," celebrity investor Jim Rogers asserts in his new book about investment in China.

Rogers is known for helping George Soros establish the Quantum Fund in the 1970s, for writing books such as Investment Biker and Hot Commodities and for predicting the bottoming-out and recovery of the Chinese stock market. Unfortunately, in this book, Rogers does not provide "a corner on the best information".

The title - A Bull in China - is somewhat misleading to start with, since Rogers upped sticks from the US to Singapore, rather than China. When I asked him recently why, if he is so bullish on the country, he doesn't live here, he replied that his family had planned to live in Shanghai until the shocking air pollution made them decide on far-flung Singapore instead.

The book reads like a combination of personal memoir, stock pick listings and historical explanation of the Chinese economic miracle. The style is breezy and intended to entertain but at times gets bogged down in trying to explain the complexities of the Chinese stock market.

The most interesting parts are the author's personal recollections of his first visit to China in the mid-1980s. Rogers provides a great description of buying a single share in a bank over the counter in Shanghai in 1986 before the Chinese stock markets had even been set up. He also describes trips on his motorbike across the country when many roads turned to sand or were washed away by floods.

Sadly, such anecdotes make up a small part of the book.

The underlying hypothesis is indisputable - that China will continue to grow and there will be lots of good investment opportunities in a range of industries - but this revelation comes two and a half years into a bull run in the Chinese stock market that has seen the benchmark index jump six-fold.

During a recent publicity tour Rogers made headlines by announcing that he was selling every US dollar asset he owned and buying China's renminbi assets. But when I asked what exactly he was buying he was less forthcoming. He conceded that prices in the Chinese real estate and stock markets were reaching bubble levels and no one should buy them now, but said he was not making direct investments in factories or unlisted local companies. Pressed a bit harder, he correctly pointed out that any foreigner can open a bank account in China and he was buying cash.

The renminbi is still not a freely convertible currency and, although it used to be much easier to buy renminbi than to exchange it for foreign currencies, in early 2007 the government ordered Chinese banks to restrict individuals' annual purchases of renminbi to the equivalent of $50,000, the same amount that can be changed into foreign currencies each year.

China has a thriving black market and extensive underground banking system but Rogers assured me he has not resorted to illegal means to buy renminbi. As a significant institutional investor, Rogers may be able to structure some sort of offshore, renminbi-based non-deliverable forward contracts with an investment bank but that is hardly an option available for individual investors wanting to get a piece of China.

At times, this book reads like a collection of analyst research notes with each section followed by an incomplete list of Chinese companies with stock codes and a quick blurb. Quite a few of the highlighted companies are domestically listed "A-shares", which individual foreign investors are not yet allowed to buy. At other times, the book reads like a history of China's capital markets. But much of the information is out of date and in some places inaccurate or misleading.

For instance, his explanation of the confusing Chinese stock market contains some key errors, such as an assertion that the proportion of shares in the market owned by the government dropped from 78 per cent in 2002 to less than 50 per cent by mid-2006. In fact, the state directly owned more like 50 per cent of all shares in 2002 and the proportion of state ownership in the market has risen since then following a spate of big state-owned enterprise listings.

To his credit, Rogers clearly believes in the China story he is selling in this book. But it doesn't take a financial wizard to be positive on the country's long term prospects and with the proliferation of books on offer from other old China hands there is little need to bother with this list of stock picks.

Copyright The Financial Times Limited 2008