The Ultimate Frontier Market: Veteran Investor Expects Explosive Growth In North Korea

Courtesy of the Wall Street Journal, an interesting report on Jim Rogers’ interest in North Korea:

Jim Rogers is burnishing his credentials as the Indiana Jones of Finance by looking to the ultimate frontier: North Korea.

Rogers, who made his name co-founding the Quantum Fund with financier George Soros, is searching for investments far off the beaten path as near-zero percent interest rates in many developed economies sap returns from most mainstream markets.

Rogers has been successful charting his own course in the past. In the late 1990s, several years before China’s rapid urbanization and industrialization triggered a resource-price boom, Rogers sang the praises of investing in commodities.

Today, he is anticipating the time when explosive growth arrives in the pariah state North Korea. “If I could put all my money on North Korea, I would,” Rogers said on Monday during a visit to The Wall Street Journal. “It’s where China was in 1980.”

The country has developed a semi-market economy in recent years, leading Rogers to believe that a reintegration into the world economy could be on the horizon. He has been scouting for Chinese companies that sell to North Korea, and learning from Korean expatswhere he lives in Singapore about the country’s effort to develop a stock exchange.

So far, the only way he’s found to get exposure to the country is through purchasing North Korean precious-metal coins.

“Unless you go there and start a business, which is nearly impossible for Americans, there’s no other way that I know [to invest in North Korea],” Rogers said.

Rogers is no stranger to scorned dictatorships and frontier economies. He has recently made a small investment in Zimbabwe, and in other African countries including Ghana, seeking out “blue-chip” companies that have subsidiaries that trade on local exchanges there.

While he says North Korea’s and Zimbabwe’s economies have been “a nightmare,” he’s also seen signs of progress that are making him optimistic.

The semi-private sector now provides a living for about three-quarters of North Koreans, The Wall Street Journal reported last month. Zimbabwe has also made strides in managing the domestic currency problems that not long ago led it to have a 100-trillion-dollar bill.

“Historically, when a country gets that bad and starts trying to attack the problem it usually leads to some period of recovery,” Rogers said.

It’s not just the inherent potential of North Korea’s and Zimbabwe’s markets that attracts Rogers, however. “I look around the world and I don’t see many great places to invest,” he said. In recent years he has been among a group of doomsayers predicting financial turmoil that will lead to widespread bankruptcies and other problems.

Rogers, who hasn’t managed funds for other people since 1980 and declined to discuss the size of his own investments, said he sold investments in many countries, including India and Japan, on expectations of potential financial problems worldwide.

He hasn’t completely lost faith in the pillars of the global financial system, though. His largest currency holding is the U.S. dollar, to which he expects people to flock as a safe-haven investment.


This entry was posted on Saturday, September 19th, 2015 at 8:38 am and is filed under North Korea.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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Wildcats & Black Sheep is a personal interest blog dedicated to the identification and evaluation of maverick investment opportunities arising in frontier - and, what some may consider to be, “rogue” or “black sheep” - markets around the world.

Focusing primarily on The New Seven Sisters - the largely state owned petroleum companies from the emerging world that have become key players in the oil & gas industry as identified by Carola Hoyos, Chief Energy Correspondent for The Financial Times - but spanning other nascent opportunities around the globe that may hold potential in the years ahead, Wildcats & Black Sheep is a place for the adventurous to contemplate & evaluate the emerging markets of tomorrow.