Rogers, Buffett see definite signs of recession in US
25 October 2007
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Mumbai: The United States economy has entered a recessionary phase, according to investor Jim Rogers, even as billionnire investor Warren Buffett said he expected the dollar to weaken further.
Rogers told UK's Daily Telegraph that he was switching out of the dollar and into yen, the yuan and the Swiss franc while Buffett said South Korean stocks offered better value than other world markets.
Buffett, worth $52 billion in March, according to the Forbes Rich List, said his Berkshire Hathaway company is still on the hunt for bargains as the US subprime mortgage crisis plays out.
Rogers, who co-founded the Quantum Fund with billionaire investor George Soros in the 1970s, said it made sense to desert the dollar. He had predicted the 1999 commodities rally, also said he was still bullish about surging Chinese stock markets despite worries over a bubble.
"The US economy is undoubtedly in recession," the Telegraph quoted Rogers in an article published on its website.
"Many parts of industry are actually in a state worse than recession. If it were not for Bernanke (Federal Reserve chairman) putting huge amounts of money into the market, the stock market would probably be down much more than it is," he said in an interview in Hong Kong.
The Fed slashed borrowing costs by 50 basis points to 4.75 per cent in a bid to shore up the world's biggest economy from the subprime mortgage market crisis and the global credit crunch it triggered. The Fed is widely expected to lower interest rates again next week.
Buffett's Berkshire Hathaway, which owns more than 70 businesses and has some $100 billion of stock and bond investments, has a stake in only one listed South Korean company, the world's fourth-biggest steelmaker POSCO.
Berkshire said in March it held a 4 per cent stake in POSCO as of the end of 2006. "We are gaining foreign currency exposure that we like," said Buffett.
"We are still negative on the dollar. We bought stocks in companies that are earning their money in other currencies," he told reporters during a visit to Berkshire's Korean cutting tool maker subsidiary, TaeguTec.
The US currency has lost 23 per cent against the South Korean won since the end of 2003, hit by accumulating current account surpluses in South Korea and a steady inflow of portfolio investment into the country's financial markets.
IMF managing director Rodrigo Rato, meanwhile, said the US currency was still overvalued and that there was room for further depreciation. |
