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Jim Rogers: China Still a Buy
After a massive $586 billion stimulus package, China announced today that it would slash interest rates by 1.08%. This would be the largest rate cut since the Asian financial crisis in 1997.
China is scrambling to keep its growth rate up in light of a global recession. The World Bank cut China’s growth outlook for 2009 to 7.5%. Still at a blistering pace in historical terms, this is slower than this year’s expected 9.4% expansion and last year’s 11.9%.
In addition to rate reductions, China has cut bank reserves requirements and launched a stimulus program to reinvigorate its economy. But the ultimate cost could be an inflationary environment that increases prices – restricting the very exports they are trying to encourage.
But there are still many who are bullish on China.
Jim Rogers, famed pundit and Chinese proponent, has been moving his U.S. dollars into Japanese yen, buying China and Taiwan. He believes that the dollar will lose its status as the world’s reserve currency – even as the dollar has moved higher. It’s climbed almost 20% the past eight months.
It remains to be seen if his currency bets will pay off as his gold and oil calls did early this year. Rogers also believes that commodities are a strong buy right now – even as his Rogers International Commodity TRAKRS Index (.RCT) has fallen 53% since July.
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