Guru ready to bail out of China equities as bubble looms

Guru ready to bail out of China equities as bubble looms
Fulton Mak
Tuesday, September 18, 2007
Commodities investment guru Jim Rogers has warned the mainland equity markets are headed for a bubble and he may bail out if the benchmark Shanghai Composite Index doubles to 10,000 points by February.Yesterday, the Shanghai Composite Index, which tracks the bigger stock exchange in the mainland, surpassed a previous high and closed up 2.06 percent at 5,421.392 points.
The index has gained 102 percent since the beginning of the year. While investors are wary of overstretched valuations, analysts are projecting the index to test 6,000 this year.
Rogers noted earlier this year, that there was "speculative excess" in emerging markets and he sold out of those markets, "except for China."
According to a report in Shanghai Securities News, he said he would still hold on to his holdings of mainland stocks even if the market tanked 50 percent, but would bail out if the Shanghai Composite rallies to 10,000 points in February - a level at which, he says a bubble would have formed. He said the market is yet to reach its peak, but a bubble is beginning to form.
Meanwhile, he forecast the mainland economy to surpass Japan and the United States to become the world's largest economy by 2025 or earlier, but it would take several centuries for the country to be ranked number one in terms of gross domestic product per capita, Nan Fang Daily reported.
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