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Jim Rogers Invests in China

Preparing for Growth in China

Written by Marcelina Hardy
Posted November 12, 2013 at 3:05PM

China is getting ready to make huge changes to its economy. This past weekend, the Communist Party had a meeting in which it discussed major economic reform. The changes coming down the pipeline are making some investors wary, while others are very excited.

Jim Rogers is one of the more excited investors. He believes China – the world's second largest economy – will see a lot of growth in the coming years. And when a nation grows, it’s making money.

china rate hike fearsOverall, Rogers believes Chinese stocks are worth his money. He hasn’t been investing in these stocks the last five years because it didn’t seem opportunistic – but that's all about to change. He’s taken the step towards Chinese stocks because he expects there’s going to be major growth in particular sectors.

But investing in China doesn’t mean throwing your money into any investment you can find. There are certain investments Rogers believes will be much more fruitful over the next few years.

Knowing which sectors will end up growing the most will give you an upper hand as an investor. Rogers spoke at an economic forum in Guanghzou recently, and according to Want China Times, he recommended looking for the following in Chinese stocks:

  • Companies having to do with the environment. These will receive a lot of attention from the Chinese government. Funds will be given to this sector to lower pollution levels, which will help it increase by as much as 25% in the next five years.

  • Agriculture. This another sector that will receive a lot of attention from the government. Agricultural exports will be a big source of revenue for China, and Rogers believes this sector will grow significantly in the next few decades.

Where you invest in China should fall in line with where the government is investing, according to Rogers. The government wants certain parts of its economy to grow, so it is dedicating funding to them. If you step in line with what the government is doing, you can pick up the trails of returns from its investments.

Following the government’s investments means you’ll have to pay a lot of attention to the news headlines over the next few months. There are going to be a lot of changes, and you need to keep up with those changes to know where to put your money next.

New trends will likely follow all of the changes. While this will be difficult to pinpoint at first, pay attention to the two sectors Rogers points out right now: environment and agriculture. Over time, you will start to see other sectors coming to light, which may also fall into Rogers’ criteria.

Gold Still an Option

Rogers is also a big fan of gold. When asked what he thought of the falling gold prices, he made no negative comment. Instead, he turned it around and said that if gold continues to fall, he will buy more of it.

He has hope for the gold market. He believes gold will skyrocket in the next few years because of the decrease in the U.S. dollar’s value. There’s also support for gold increasing alongside China's property values and taxes. As these things go up, many investors may turn to gold, which already has a limited supply.

Where to Invest in China

We need to look at two sectors when figuring out where to invest in China: environmental and agriculture. If you can combine the two, that’s even better.

One stock you may want to start tracking is Gushan Environmental Energy Limited (NYSE: GU). This company produces biodiesel. It has seven production facilities, which produce as much as 490,000 tons a year. Biodiesel is renewable and clean fuel. It’s made from vegetable oil and animal fat or waste oil, and it’s an environmentally friendly alternative to petroleum diesel.

Beidahuang, a rice and meat producer, is currently a private company, but it is receiving a lot of attention, so it may be worth keeping on your radar.

And Huilong (SZ: 002556) is an agricultural company that will likely see continued growth in the next few years. It’s up 43% this year, and it has grown 68% in the last three months.

Investors are excited about China's growth prospects. It’s worth your time to look into it for your investment portfolio.

 

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