… The fund manager, who co-founded the Quantum Fund with billionaire investor George Soros in the 1970s and has focused on commodities since 1998, said the crisis would spread to emerging markets which he said now faced a prolonged bear run.
“When you have a financial crisis, it reverberates in other financial markets, especially in those with speculative excess,” he said.
“Right now, there is huge speculative excess in emerging markets around the world. There will be a lot of money coming out of emerging markets.
“I’ve sold out of emerging markets except for China,” said Rogers, long a prominent China bull.
Even in China, the world’s fastest expanding economy, Rogers said stocks were overvalued and could go down 30-40 percent.
But he added: “China is one of the few countries in the world where I’m willing to sit out a 30-40 percent decline.”
The last stock market bubble to burst was the dot-com craze which sparked a crash from March 2000 to October 2002.
When the last bubble burst in Japan, said Rogers, stock prices went down 85 percent despite the country’s high savings rate and huge balance of payment surplus.
“This is the end of the liquidity party,” said Rogers. “Some emerging markets will go down 80 percent, some will go down 50 percent. Some will most probably collapse.”
