Coronavirus' impact not fully priced in, says Rogers Holdings chairman

The global financial markets, including India, have been taken aback by the rampant spreading of coronavirus and its possible adverse effects on economic growth. Jim Rogers, chairman of Rogers Holdings, tells Puneet Wadhwa that he is looking to invest in India upon a correction. He also wants the Indian government to do away with protectionist regulations. Edited excerpts:

How do you see the global financial markets play out in the backdrop of coronavirus fears?

The virus is slowing down the global economy. Airports, hotels and other public places across the globe have very few people. There has been a major impact on the Chinese economy, which as it was slowing before the coronavirus outbreak. The recent developments suggest that things may get worse from here on. There could even be bankruptcies in China is things get worse from here. This, I feel, will surprise a number of people who are not expecting such a scenario. 

I don’t think the markets are factoring in the worst as regards the coronavirus outbreak and how things may play out. Even during the last week or two, most global markets were trending up and it is only in the last few sessions that they have seen a sharp fall. Most financial markets have been taken by surprise by the (rampant spread of) coronavirus and the impact has not yet been fully priced in.

So, is the worst priced in?

No. I think the worst is yet to come for the global financial markets — not purely because of coronavirus, but slowing growth. The Chinese economy had been slowing down even before the virus’ outbreak; interest rates in the United States (US) are likely to go up eventually. This does not mean that we will not have a blow-off rally. Countries across the globe have been printing a lot of money, and spending it, too. More stimulus and printing money because of the coronavirus outbreak could lead to the last blow-off rally before the markets blow up in many countries. And this could happen before too long. This health scare is having an effect on the global financial markets which we don’t want, but we will end up paying the worst price that one can imagine!

Do you think the global economy can head into recession if coronavirus’ impact turns out to be worse-than-expected?

Maybe not because of the virus. It looks to me that the virus is already peaking in China. The country has already taken some very strong measures. However, the consequences of the virus, such as people and companies going bankrupt, may lead to a recession in a few months.

What are your views on India in this backdrop?

Narendra Modi is a very popular leader but has not done a lot to open up the Indian economy and this has surprised me a lot. I hope India’s agricultural and financial markets open up more so that it can become a truly great country. For one, Modi has got toilets cleaned and built in India which was a much-needed measure. However, several steps are still needed to fully open up India’s agricultural and financial markets. Modi should realise that it is 2020 and not 1920! India does not need all these protectionist regulations that hamper its growth potential, which the government must realise and do away with. Policies have to be framed and implemented accordingly. Modi should open India more to foreign investments. However, his actions on consolidating corporation taxes are brilliant and much-needed.

Where are you looking to invest now?

Well, I am scouting for investment opportunities. Most asset classes, especially equities, have started to drop a lot. So, the more prices fall, the more avenues it opens up for me. Regions like South Korea and sectors like airlines are investment-worthy. Given the coronavirus scare, the tourism industry is collapsing. So, these avenues will be of great interest. Airlines will not disappear because of this health scare and people will not start using boats, instead of aircraft. Eventually, things will come around. Prices of those assets that will fall the most are the ones that interest me.

Are you looking to invest in India?

Well, yes. If the Indian markets correct, I will look at India as an investment option. That said, I am looking to anywhere in the world where assets are available at an attractive rate. Meanwhile, it is not legal for me to invest in Venezuela and North Korea -- the two regions where I would actually like to invest right now. My investment decision will be based on global developments. If there is a war and recession, the markets would decline 80 per cent; so I could wait. I would own even more gold and silver in such a case.

What are your views on crude oil and gold?

Oil prices are collapsing. That said, we will not stop using oil in the near future. I am watching oil prices very closely. I see panic and a crescendo before a hysterical collapse in oil prices. I own gold and have done so for decades. I bought more of the yellow metal last week. In the summer of 2010, I stopped buying gold and silver, except as gifts, but started buying again last summer. I will buy more gold if there are opportunities. Gold prices will be much higher in a few years — higher than you and I can both imagine right now! Whenever people have lost confidence in the economy, currencies, and governments and lost money, they have bought gold and silver as a safe-haven investment.