Technoglitch
Core Member
Commodities trading guru and hedge fund manager Jim Rogers has sold his holdings in Indian companies and exited India because, he says, the National Democratic Alliance (NDA) government has failed to live up to investors’ expectations. The chairman of Rogers Holdings Ltd, who said in April that he was becoming disillusioned by India because the Narendra Modi government has been all about talk and no action, believes the Indian market lacks any new drivers to propel it. “I am sure Modi is a smart guy, he enjoys good press, and he makes a lot of friends for India. But I, as an investor, after almost a year-and-a-half, have decided to move on to other places, partly also because stock markets are not going to be particularly good for the next year or two,” Rogers said in an interview. Edited excerpts:
During your last interaction with us, the Modi government was close to finishing a year in office. You bought into India last year after the Bharatiya Janata Party’s (BJP’s) victory under Modi, and had said that you were set to take a call on whether to remain invested in India. Are you holding on to your Indian shares?
I did wait a little more time (after the last interaction), but now I have sold all my India shares. I did sell my India shares as I don’t see anything happening. The market was high, and investors had anticipated great things, including me—even if he (Modi) were to do things, the market had already discounted some of that because it had gone up a lot, and there was nothing new coming from Modi. You can’t just invest on hope. Even If reforms started coming, it may not be enough to make the markets go higher, because markets have already factored it in. If the reforms are substantial, the markets may go higher. No indication of that.
The situation is getting better in India; the rupee has been reasonably stable as compared to other emerging market currencies, inflation is coming down, interest rates are set to go down, the fiscal deficit is under control and lower oil prices continue to help.
Well, you say that. But Modi had the largest mandate in modern history—no recent politician had what he got. But if he can’t implement reforms, then who can? Is anything ever going to be done? I think it is an accurate statement that no recent Indian government had this kind of mandate. Yet, very little reforms has happened. I am sure Modi is a smart guy, he enjoys good press, and he makes a lot of friends for India. But I, as an investor, after almost a year-and-a-half, have decided to move on to other places, partly also because stock markets are not going to be particularly good for the next year or two
As someone who has watched India for a long time, where do you see the country headed? What are the challenges for India—is it job creation for the youth that meets their aspirations?
India has very high debt-to-GDP (gross domestic product) ratio—it is higher than many countries. Studies have shown that when countries have a high debt-to-GDP ratio, it is difficult to grow at a reasonable rate. I don’t really see much going for India right now except Modi, who is not doing anything, when he should be or could be doing a lot. Your central bank governor is probably the best in the world.
Governor Raghuram Rajan has been criticized for being stubborn on interest rates.
Central bankers are supposed to be criticized for things like that. Central bankers are supposed to maintain currencies and low inflation. If you want to do something about the economy, you should call out Modi or Parliament and not the central bank. Central banks that cut interest rates because of politicians—such countries usually have economic problems, currency problems, and all sorts of other problems. In my view your central banker is doing the right thing—he understands what banking is all about, he understands what currencies are all about and he understands the economy. The more criticism he gets, the better—that means he is doing what the central bank is supposed to do.
Why don’t you invest in start-ups? Be it India, China or Southeast Asia, the start-up ecosystem is booming.
I do not invest in private companies. I feel more comfortable investing in companies where I think I can sell, if and when I want to. I don’t have the interest or the time these days to get deep into and understand these start-up companies. I do not understand technology well enough to get into such start-ups. Today, there are 100s of unicorns with billion-dollar valuations—this sounds like 1999 in the US. In 1999, the bubble was in a couple of small pockets in the US. Now, this bubble is all over the world–China, India… Now there are hundreds of entrepreneurs in their garages
Jim Rogers exits India, says one can’t invest just on hope - Livemint
During your last interaction with us, the Modi government was close to finishing a year in office. You bought into India last year after the Bharatiya Janata Party’s (BJP’s) victory under Modi, and had said that you were set to take a call on whether to remain invested in India. Are you holding on to your Indian shares?
I did wait a little more time (after the last interaction), but now I have sold all my India shares. I did sell my India shares as I don’t see anything happening. The market was high, and investors had anticipated great things, including me—even if he (Modi) were to do things, the market had already discounted some of that because it had gone up a lot, and there was nothing new coming from Modi. You can’t just invest on hope. Even If reforms started coming, it may not be enough to make the markets go higher, because markets have already factored it in. If the reforms are substantial, the markets may go higher. No indication of that.
The situation is getting better in India; the rupee has been reasonably stable as compared to other emerging market currencies, inflation is coming down, interest rates are set to go down, the fiscal deficit is under control and lower oil prices continue to help.
Well, you say that. But Modi had the largest mandate in modern history—no recent politician had what he got. But if he can’t implement reforms, then who can? Is anything ever going to be done? I think it is an accurate statement that no recent Indian government had this kind of mandate. Yet, very little reforms has happened. I am sure Modi is a smart guy, he enjoys good press, and he makes a lot of friends for India. But I, as an investor, after almost a year-and-a-half, have decided to move on to other places, partly also because stock markets are not going to be particularly good for the next year or two
As someone who has watched India for a long time, where do you see the country headed? What are the challenges for India—is it job creation for the youth that meets their aspirations?
India has very high debt-to-GDP (gross domestic product) ratio—it is higher than many countries. Studies have shown that when countries have a high debt-to-GDP ratio, it is difficult to grow at a reasonable rate. I don’t really see much going for India right now except Modi, who is not doing anything, when he should be or could be doing a lot. Your central bank governor is probably the best in the world.
Governor Raghuram Rajan has been criticized for being stubborn on interest rates.
Central bankers are supposed to be criticized for things like that. Central bankers are supposed to maintain currencies and low inflation. If you want to do something about the economy, you should call out Modi or Parliament and not the central bank. Central banks that cut interest rates because of politicians—such countries usually have economic problems, currency problems, and all sorts of other problems. In my view your central banker is doing the right thing—he understands what banking is all about, he understands what currencies are all about and he understands the economy. The more criticism he gets, the better—that means he is doing what the central bank is supposed to do.
Why don’t you invest in start-ups? Be it India, China or Southeast Asia, the start-up ecosystem is booming.
I do not invest in private companies. I feel more comfortable investing in companies where I think I can sell, if and when I want to. I don’t have the interest or the time these days to get deep into and understand these start-up companies. I do not understand technology well enough to get into such start-ups. Today, there are 100s of unicorns with billion-dollar valuations—this sounds like 1999 in the US. In 1999, the bubble was in a couple of small pockets in the US. Now, this bubble is all over the world–China, India… Now there are hundreds of entrepreneurs in their garages
Jim Rogers exits India, says one can’t invest just on hope - Livemint
