Global Stock Market Rout May Continue, Rogers Says

By Kyung Bok Cho

Nov. 12 (Bloomberg) -- The tumble in global equities may worsen because valuations are still too high, and bonds will be a ``terrible'' investment as economic problems persist until 2010, investor Jim Rogers said.

Stocks in the U.S. and Europe ``are still expensive on any historic valuation method,'' the chairman of Singapore-based Rogers Holdings told a Seoul conference today. ``We may be hitting `a' bottom. I don't know if it's `the' bottom.''

More than $28 trillion has been erased from global equity markets as credit losses and writedowns climbed to $690 billion in the worst financial crisis since the Great Depression. The U.S. has announced a $700 billion bank bailout, while China on Nov. 9 pledged 4 trillion yuan ($586 billion) to bolster its economy.

Rogers's purchases since mid-October include commodities and equities in China and Taiwan, as well as ``a Korea stock,'' he said, without giving details. He still favors commodities as an investment as fundamentals are ``unimpaired'' amid a global liquidation of assets, he said.

China's stimulus package is ``certainly going to have an effect on some industries,'' including the electricity and water industries, though others remain vulnerable to developments in the U.S., Rogers said.

Worst Performer

``Some parts of the Chinese economy are going to be badly affected by the Western recession and some parts are going to do well,'' he said. ``The problem of course is that part of the Chinese economy is tied to the West.''

China's benchmark stock index, the CSI 300, has slumped 67 percent this year, making it Asia's worst performer. In comparison, the Dow Jones Industrial Average index of 30 leading U.S. companies has lost 35 percent.

An MSCI index of developed- and emerging-market stocks has lost 44 percent so far this year, compared with a 30 percent decline in the Reuters/Jefferies CRB Index of 19 commodities.

``You will see that stocks have gone down more so far than commodities. That will continue as far as I'm concerned,'' he said. ``I have started going back into the markets; that does not means it's the bottom.''

Rogers, 66, correctly predicted the start of the commodities rally in 1999. His books include ``Hot Commodities: How Anyone Can Investment Profitably in the World's Best Market'' and ``A Bull in China: Investing Profitably in the World's Greatest Market.''

``Bonds are going to be a terrible place to be for the next 10, 20 years,'' Rogers said, because governments around the world will be issuing great amounts of debt to back up their expanded spending. Inflation will accelerate because of increased money supply, he said.

To contact the reporter for this story: Kyung Bok Cho in Seoul at kcho7@bloomberg.net