Rogers: China Stocks Overvalued

Commodities expert Jim Rogers, such a China bull that he reportedly plans to move there and is teaching his daughter the language, told China’s state-run China Central Television (CCTV) in an interview on Wednesday that stocks may be overvalued.

Rogers said that there are signs that the market is overheated and that this may not be the best time to buy stocks. According to translations of the interview, Rogers warned that the stock market is at a bubble stage based on his observations of people crowding in to Galaxy Securities, a local brokerage firm. Rogers said that investors are in a "hysterical” state of mind.

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Rogers noted that if China’s central government introduces more powerful measures to cool the overheating economy, the bubble would burst.

In May 2004, Rogers correctly predicted that China’s stock market would bottom out within four to 16 months. The low was reached in June 2005, thirteen months later.

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So when Rogers speaks, investors listen. Stocks plunged yesterday despite the fact that China announced economic growth of 10.7 percent in 2006.

"Rogers was only one of many factors behind the market losses. After all, the market has risen too much, so it is always easy to find an excuse to sell,” a fund manager for a domestic insurance company tells Reuters.

Specifically, Rogers pointed to Industrial and Commercial Bank of China (ICBC), saying the stock was getting expensive and that Chinese banks lag world-class banks in customer services and management, according to newspaper translations.

Hong Kong newspaper, The Standard, reported that market analysts were speculating that Rogers’ appearance was a signal that the central government wants to talk down stocks from their lofty valuations.

Rogers co-founded the Quantum hedge fund with billionaire George Soros in the 1970s and is author of the book, Hot Commodities.

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