His logic is simple.
The Dow Jones and other U.S. market indices are all at record highs. The implication might be that it’s difficult to predict how much further they could reach. Rather than risk getting burned by excessive Trump Effect optimism, it’s better to look at undervalued markets, says Rogers. Russia tops the list.
This is because Donald Trump will likely entertain far better relations with Moscow and Vladimir Putin than his predecessor. The improved political ties should result in an end of the sanctions that the U.S. and some NATO allies imposed against Moscow in the wake of the Ukraine conflict and Crimea annexation.
Trump Is Not the Only One Wanting Better Relations with Russia
There are already European countries clamoring to end the sanctions regime against Russia. Indeed, in 2017, there is a growing pressure to challenge globalization as the world has known it. It is unlikely that Trump will trigger a trade war against either China or Mexico. That could bring disaster.
Trump was already seen chumming around with Jack Ma of Alibaba Group Holding Ltd (NYSE:BABA). That suggests Trump might simply alter the relationship with Beijing, rather than scrap it altogether. Indeed, Trump will not break the recent U.S. foreign trade and relations record, as much as open it up to ignored or ostracized parties—like Russia, for example.
Jim Rogers predicted the two most surprising political events of 2016: the victories of Brexit and Trump. So, when he says Russian equities are bullish in 2017, investors should examine the suggestion seriously. He admits to having bought some Russian equities already. (Source: Ibid.)
If you’re not convinced, consider that Russia could move from negative GDP to 0.5% growth in 2017. The optimism surrounding the Russian ruble in the second half of 2016 should continue steadily in 2017.
Jim Rogers suggests that, from the investment perspective, he recommends the agricultural sector when it comes to investing for the highest value. As for the smallest value, he targets American tech firms.
As for China, Rogers is less concerned by what Trump might do than what China could do to itself. China’s laundry list of problems to resolve has grown larger. China has entertained too many “top trading partner” relationships with countries all over the world.
When those countries have problems, therefore, so does China. Chinese growth will continue, but at a smaller pace. That’s why the Russian market makes sense. Russia has nowhere to go but up. Trump promises to be a major catalyst for the “up” to materialize.