Asian News

[Aspiration]

Ichiro,

I think your analysis is spot on. Until things stabilize somewhat (And I do not think we have seen the real bottom yet), I will be sitting on the sidelines. Once it looks like we really have hit the bottom (I'm guessing at least another week with some sliding even after the rapid descent stops, but it's purely guesswork), I will jump back into the market and do some value buying. Do you have any thoughts on how long it might take the Asian markets to hit a "bottom?"

 

[Ichiro]

Now, it may be the unwinding of the carry trade in yen which may impact on the market....

European shares fall further, yen strength weighs
Thu Mar 1, 2007 7:50am ET136


LONDON, March 1 (Reuters) - European shares followed U.S. stock futures lower on Thursday as the strength of the yen fuelled worries over unwinding of the carry trade in that currency.

The FTSEurofirst 300 index of top European shares was down 1.1 percent at 1,465.48 points, its lowest point in the day.

U.S. stock futures for the main indexes were down 0.6 percent as the yen rallied to 117.61 against the dollar <JPY=> and 155.44 against the euro

info:http://yahoo.reuters.com/news/artic...03-01_12-50-40_L0129362&type=comktNews&rpc=44

 

[Ichiro]

Aspiration,

I think that the asian stocks would need a few more down days before it could start rising again since they appreciated too fast in a very short time span. If the US stock market stablizes (I mean the Dow and the SP500) in the next few days, that should help the Asian stocks. My only concern is that the US small caps really did not participate in this rally yesterday. I would watch the moving averages of asian stock markets very closely. The unwinding of the carry trade of the yen could spoil all this....

 

[Ichiro]

1mar- Reuters-Futures sink as risk aversion resurfaces (the unwinding of the carry trade of yen will have a major impact on the market today. As I said earlier, some of the hedge funds will be in big trouble this week).
Thursday March 1, 8:10 am ET

NEW YORK (Reuters) - Stock index futures fell on Thursday as the yen strengthened, raising worries that the risk aversion shown by investors in Tuesday's global equities rout may resurface when Wall Street opens.


The carry trade features borrowing in yen because of Japan's low interest rates and investing in higher-yielding, often risky assets and markets. The strategy is popular among hedge funds.

"Global liquidity has been the main driver for the market, and the carry trade is a major contributor to that liquidity," said Michael Malone, trading analyst at Cowen & Co. "It was my expectation that the worst was not necessarily over after Tuesday. I'm not sure we'll return where we were at the close on Monday."

S&P 500 futures were down 10.5 points, below fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.

 

[Ichiro]

2mar- AP-Stocks Stage Comeback on Upbeat Data (I just added postion in VO this morning--what a deal!!!)
Thursday March 1, 2:39 pm ET
By Madlen Read, AP Business Writer
Stocks Stage Comeback on Upbeat Manufacturing Report, Indexes Turn Positive

NEW YORK (AP) -- A still skittish Wall Street staged a comeback Thursday, with the Dow Jones industrials erasing almost all of 209-point drop after an upbeat assessment of manufacturing activity eased some worries about a flagging U.S. economy.

The blue chip index nudged into positive territory in midafternoon, then fluctuated in a narrow range. Several hours earlier, the broader Standard & Poor's 500 index made its first foray into the plus column.

Investors, relieved that manufacturing is still expanding, bought some of the stocks pummeled in Tuesday's drop that sliced 416 points off the Dow. Fears about the U.S. economy contributed to that plunge, and a halfhearted rebound on Wednesday followed soothing words from Federal Reserve Chairman Ben Bernanke.

The Institute for Supply Management's index of February manufacturing activity came in at 52.3, stronger than the 50.0 reading analysts expected and up from 49.3 in January. The index is an important measure of a part of the economy that has given investors headaches in recent months. Manufacturing has suffered from the listless housing market and hard-up auto industry, and at times has given off signals that a recession might be in the offing. A reading at 50 and above indicates expansion, while anything below 50 signals contraction.

The ISM data helped the market regain lost ground, but anxiety still plagued the Street, with the indexes bouncing around choppily as many investors bailed out of equities and fled to safe havens like Treasurys, fearing that stocks could see a bigger correction.

"The aftermath of Tuesday's major selloff will linger for the next couple of days. I don't think we're totally out of the woods yet," said Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners Inc.

info:

http://biz.yahoo.com/ap/070301/wall_street.html?.v=74

 

[Ichiro]

2mar-Yen Gains to 11-Week High as Investors Unwind Their Trades (carry trade causing the yen to appreciate....As the GOJ icnreases their interest rate, the yen will appreciate more but would cause instablity to the world stock market. Why? the hedge fund will be forced to unload their stock investments)

By Min Zeng

March 1 (Bloomberg) -- The yen rose to an 11-week high against the dollar and gained versus the euro on concern falling stock markets are prompting investors to unwind trades they had financed by borrowing the Japanese currency.

Traders exited the so-called carry trade as they cut their appetite for riskier assets in emerging markets and moved into U.S. government debt. Investors have taken advantage of the lowest interest rate among major economies in Japan to borrow yen and buy higher-yielding assets elsewhere. The dollar pared its losses after U.S. manufacturing unexpectedly expanded last month.

``The market is getting nervous,'' said Alan Ruskin, head of international currency strategy in North America at RBS Greenwich Capital Markets Inc. in Greenwich, Connecticut. ``You are going to see yen strength as risk appetite is compressed.''

Japan's currency rose 0.7 percent to 117.73 per dollar at 2:04 p.m. in New York from 118.56 yesterday. It reached 116.97, the highest since Dec. 13. The yen advanced 1.1 percent to 155.19 per euro from 156.85, and increased versus the British pound, the Canadian dollar and currencies in Australia and New Zealand.

The yen gained the most since July 2005 against the dollar on Feb. 27 amid a global equity decline.

The Japanese currency rallied 1.9 percent against the South African rand, 1.6 percent versus the Turkish lira and 1.6 percent against Iceland's krona as investors shunned emerging-market assets.

info:

http://www.bloomberg.com/apps/news?pid=20601087&sid=ajIHW5zodLFk&refer=worldwide

 

[Ichiro]

2mar-China's Stocks Extend Declines on Valuation Concern; Banks Drop

By Zhang Shidong and Yidi Zhao

March 1 (Bloomberg) -- China's stocks, the catalyst for a global selloff this week, extended declines on concern shares are too expensive relative to earnings.

Industrial & Commercial Bank of China Ltd., which last year raised $22 billion in the world's biggest initial public offering, and Bank of China Ltd. led the drop.

``Valuations for the whole market are a bit high, making investors jittery,'' said Chen Shide, who manages about $212 million at GF Fund Management Co. in Guangzhou. ``Some funds are also selling stocks that made substantial gains.''

The Shanghai and Shenzhen 300 Index, which tracks yuan- denominated A shares listed on China's two exchanges, slid 71.03, or 2.8 percent, to 2473.54 at the close. The measure added 3.5 percent yesterday, after plunging 9.2 percent two days ago. It has climbed 20 percent this year.

The key measure is valued at 38 times earnings, compared with 15 times for the Morgan Stanley Capital International Emerging Markets Index.

The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, dropped 2.9 percent to 2797.19. The Shenzhen Composite Index, which covers the smaller one, slid 2.3 percent to 719.90.

Stocks around the region fell, adding to the steepest losses in eight months yesterday, after China's equities plunged the most in a decade earlier this week. The Dow Jones Industrial Average slid 3.3 percent on Feb. 27. The U.S. measure added 0.4 percent yesterday.

info:
http://www.bloomberg.com/apps/news?pid=20601089&sid=axgdzlVNQFnY&refer=china

 

[Ichiro]

2mar-Emerging-Market Stocks Extend Global Decline for a Third Day (watch the emerging market stocks---high risk)

By Alexander Ragir

March 1 (Bloomberg) -- Emerging markets fell, heading for their biggest three-day decline in almost eight months, as investors sold shares in the largest developing countries on concern that global growth will slow.

Stock indexes in Russia, China and Turkey fell more than 2.9 percent each, helping extend the slide in the Morgan Stanley Capital International Emerging Market index to 6.3 percent since Feb 26. Brazil's Bovespa fell 1.1 percent. The global equity rout was triggered by a plunge in Chinese shares two days ago and a U.S. report on durable goods orders that missed economists' forecasts.

``The markets that are crowded have seen the biggest shake- out,'' said Bill Rudman, who helps manage about $2 billion of emerging-market equity for WestLB Mellon Asset Management in London. ``The possibilities of economic risk would also be more questionable in Europe. That would include Russia and Turkey.''

Reports earlier this week said durable goods orders in the U.S. fell the most in three years, while a barometer of business activity contracted for a second month and dropped to the lowest since October 2002. The rout started in China on Feb. 27 amid concern the government of the fastest-growing major economy will tighten controls on investment.

China's Shanghai and Shenzhen 300 Index fell 2.8 percent on concern that shares are too expensive relative to earnings. Industrial & Commercial Bank of China Ltd., which last year raised $22 billion in the world's biggest initial public offering, fell 3 percent. Bank of China Ltd. fell 1.3 percent.

``What you're seeing in emerging markets is an extension of the impact of globalization,'' said Christopher Palmer, who helps manage $3.5 billion in emerging market equities for Gartmore Investment Management in London. ``China's problem is no longer a Chinese problem.''

info:
http://www.bloomberg.com/apps/news?pid=20601089&sid=adGiqPMkvGLQ&refer=china

 

[Ichiro]

2mar-- According to the 6 am Business News in Japan, the Nikkei may range today between 17,100 and 17,500 (close: 17,453) today (2mar) and the yen between 117.20 and 118.20 (close:117.57). They also stated that the Nikkei may not stablize until it hits below 17,000.

 

[Ichiro]

2mar-hina Tightens Control of Banks' Foreign Borrowing (Update2)

By Zhang Dingmin

March 2 (Bloomberg) -- China tightened controls on short- term foreign borrowing by local banks to protect the country's financial security and help correct international imbalances, the currency regulator said.

The State Administration of Foreign Exchange has lowered borrowers' outstanding foreign-debt quotas for 2007, the Beijing-based regulator said in a statement on its Web site, without being more specific.

``Short-term foreign debt is rising too fast,'' the regulator said.

China's medium and short-term foreign debt rose 16 percent in 2006, the regulator said. The Asian nation's foreign debt was $288 billion as of March last year. Short-term debt now accounts for about 57 percent of the total, the regulator said.

Foreign currency deposits in China stood at 1.3 trillion yuan ($168 billion) at the end of January, according to money supply data released by the government.

info:
http://www.bloomberg.com/apps/news?pid=20601087&sid=apBCV1YRsflY&refer=home

 

[Ichiro]

2mar-European Stocks Fall as China Tightens Borrowing; BHP Declines

By Sarah Thompson

March 2 (Bloomberg) -- European stocks extended the worst rout in four years after China tightened controls on short-term foreign borrowing, heightening concern that expansion in the world's fastest-growing major economy will slow.

Rio Tinto Group, BHP Billiton and Xstrata Plc led a slide by mining companies on concern that demand for metals from the world's most populous country will decline.

The Dow Jones Stoxx 600 Index is set for the biggest weekly decline since March 2003, the month the U.S. invaded Iraq, amid concerns global economic growth is headed for a decline.

``There is an effort to try and cool down the Chinese economy,'' said Henk Potts, a fund manager at Barclays Stockbrokers in London, which manages $45 billion. ``What we have seen is how important China has become. It's truly an integral part of the global economy.''

The Stoxx 600 Index fell 0.3 percent to 360.87 as of 10:06 a.m. in London after earlier gaining 0.8 percent. The Stoxx 50 fell 0.2 percent and the Euro Stoxx 50, a measure for the 13 nations sharing the euro, dropped 0.2 percent.

China tightened controls on short-term foreign borrowing by local financial institutions to protect its financial security and help correct international imbalances.

info:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aARhm8DhhdT8&refer=home

 

[Ichiro]

2mar-Sakakibara Says BOJ Could Raise Interest Rates in May (Update2) (bad news---I need to get out before May 07... The carry trade will unwind faster when the interest rate is raised).

By Jason Clenfield and David Tweed

March 2 (Bloomberg) -- Eisuke Sakakibara, former currency- policy chief at Japan's Ministry of Finance, said it's possible the central bank will raise interest rates in May rather than wait until parliamentary elections are held in July.

When the Diet is in session it's easier to raise rates because any criticism of monetary policy by the ruling Liberal Democratic Party will be countered by the opposition, Sakakibara said in a speech at the foreign press club in Tokyo today.

The Bank of Japan doubled its key overnight lending rate to 0.5 percent last week, its second rate increase in six years. Sakakibara said the bank should have acted in December. Twenty- two of 26 economists surveyed by Bloomberg News last week said there'll be no further increases until the second half of 2007.

Sakakibara said the yen will remain weak for the time being, predicting the currency to trade in the 115 to 120 range against the dollar and around 150 per euro.

The former Finance Ministry official said he expects the so- called yen carry trade to continue for some time. He said it's necessary that the trade, in which investors borrow in Japan's currency to buy higher-yielding assets overseas, unwinds slowly.

The yen headed for its biggest weekly gain against the dollar in 14 months after a slump in emerging-market stocks and bonds discouraged investors from making the trades.

Japan's currency has gained almost 3 percent this week, the biggest increase since the period ended Dec. 16, 2005, to 117.64 per dollar at 3:39 p.m. in Tokyo from 121.08 on Feb. 23. It rose to 154.96 per euro from 159.38 at the end of last week.

info:

http://www.bloomberg.com/apps/news?pid=20601080&sid=alctBTMt36tM&refer=asia

 

[Ichiro]

2mar-China's Stocks Advance After Slump; China Vanke, ZTE Lead Gains

By Zhang Shidong

March 2 (Bloomberg) -- China's stocks rose as some investors judged this week's tumble, the biggest in four weeks, as excessive. China Vanke Co., the nation's No. 1 property developer, led an advance by shares that had fallen the most.

``The market has been calming down and has stabilized after the rout,'' said Yan Ji, an investment manager at HSBC Jintrust Fund Management Co. in Shanghai, which oversees about $517 million. ``Confidence will return as we see all the fundamentals still support an upside.''

The Shanghai and Shenzhen 300 Index, which tracks yuan- denominated A shares listed on China's two exchanges, advanced 35.19, or 1.4 percent, to 2508.73 at the close. The measure had a 6.3 percent tumble this week, its biggest drop since the five days to Feb. 2.

The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, gained 1.2 percent to 2831.53. The Shenzhen Composite Index, which covers the smaller one, rose 1.5 percent to 730.55.

Stocks had their steepest declines in a decade on Feb. 27 amid concern that a government crackdown on investments with borrowed money will end a rally that drove benchmarks to records.

China's plunge, coupled with concern the U.S. economy would slow, sparked a worldwide rout this week. The Dow Jones Industrial Average has fallen 3.2 percent in the last three sessions, while stocks across Europe and Asia also declined, extending their worst slump in four years and wiping out more than $1.5 trillion in global market value.

`Short-Term Correction'

The economy, which in 2005 overtook the U.K. as the world's fourth largest, averaged annual growth of 9.6 percent in the past five years. It expanded 10.7 percent last year.

info:
http://www.bloomberg.com/apps/news?pid=20601089&sid=aEzGlZ5jJSh4&refer=china

 

[Ichiro]

2mar- AP-Experts: Yen's Rally Won't Last (Folks, it doesnt look good since the yen is appreciating too fast. In a few days, the dollar will appreciate and the I fund will take a hit.).
Friday March 2, 7:13 am ET
Former Japanese Government and Central Bank Officials Say Yen's Rally Won't Last

TOKYO (AP) -- The yen's recent recovery may have little staying power because Japanese interest rates are still too low to render so-called yen-carry trades impractical, a trio of former Japanese government and central bank officials said Friday.

ADVERTISEMENT
The dollar fell as much as 3.4 percent against the Japanese currency this week to 116.69 yen, its lowest level in two and a half months.

Traders were spooked into unwinding bets that the dollar would strengthen amid renewed concerns about a U.S. slowdown and the sell-off in worldwide stock markets, analysts say.

But Eisuke Sakakibara, who served as Japan's vice finance minister for international affairs between 1997-1999, said yen-carry trades -- a strategy to borrow money at Japan's low rates to earn higher returns abroad -- will likely remain popular and that should keep the yen the from appreciating too much.

"The carry trade will continue for some time, and this weak-yen tendency is not going to be reversed quickly," Sakakibara told a seminar hosted by the Foreign Correspondents' Club of Japan.

The yen's persistent weakness is unlikely to be affected by any tightening of interest rates, added Rei Masunaga, former director general of the Bank of Japan's foreign department, given that the central bank's benchmark rate is 0.5 percent, far lower than the U.S. rate of 5.25 percent or the euro bloc's 3.5 percent.

The yen's recent weakness has been drawing criticism from Japan's trade partners, especially European policy-makers, because it benefits Japanese manufacturers by making their products more competitive on global markets.

for info:

http://biz.yahoo.com/ap/070302/japan_yen_prospects.html?.v=1

 

[Ichiro]

2msar-Yen Heads for Best Week in 14 Months on Exit From Carry Trades

By Aaron Pan and Chris Young

March 2 (Bloomberg) -- The yen headed for its biggest weekly gain against the dollar in more than 14 months after a slump in emerging-market stocks and bonds discouraged investors from borrowing the currency to buy higher-yielding assets.

The Japanese yen is the best-performing currency in the world this week, as investors unwind so-called carry trades where they buy the currency to repay their loans. The South African rand and the New Zealand dollar, higher-yielding currencies that have benefited from the carry trade, are the two worst performers in the week. Asian shares also slumped for a third day.

``The desire to reduce risk remains the key driver in the financial markets,'' said Derek Halpenny, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. ``The yen continues to gain in the foreign-exchange market as participants unwind further short yen positions.'' A short position is a bet that an asset price will decline.

Japan's currency has gained 3.4 percent this week, the biggest increase since the period ended Dec. 16, 2005, to 117.20 per dollar at 7:42 a.m. in New York, from 121.08 on Feb. 23. It reached 116.92 earlier, the highest since Dec. 13. Japan's yen rose 3.4 percent to 154.23 per euro from 159.38 at the end of last week. The euro dropped today as a report showed German retail sales slumped in January.

U.S. Treasuries also headed for a weekly gain as investors sought protection in government debt. The yield on the benchmark 10-year Treasury note tumbled 13 basis points to 4.54 percent, from 4.67 percent on Feb. 23. Emerging-market dollar debt yield spreads over Treasuries widened this week by the most since September.

Stocks Sell-Off

The sell-off in stocks has fueled a 7.2 percent weekly gain in the yen against the South African rand and a 6.2 percent advance versus the New Zealand dollar. The Morgan Stanley Capital International Emerging Market Index has slumped 6.6 percent this week to 878.25.

``This is a major hiccup for the carry trade,'' said Clifford Bennett, chief strategist at FxMax, a Sydney-based currency forecasting company. ``I'm bullish on the yen against the dollar'' and it may reach 112 in a month.

The Swiss franc, another currency that is used to fund carry trades, is headed for its fifth straight week of gains versus the dollar. It last traded at 1.2221 against the U.S. currency, from $1.2326 a week ago.

info:http://www.bloomberg.com/apps/news?pid=20601087&sid=atqOu.nVtT68&refer=home

 

[Ichiro]

2mar-U.S. Stock-Index Futures Decline; Dell, Hewlett-Packard Slide (Dell may extend the global selloff)

By Eric Martin and Adria Cimino

March 2 (Bloomberg) -- U.S. stock futures fell as a profit shortfall at Dell Inc., the world's second-largest personal- computer maker, added to concerns that slowing earnings and economic growth will extend a global selloff.

Hewlett-Packard Co., Dell's rival, also retreated. Speculation that profit at technology companies may trail estimates has risen following a Gartner Inc. report this week that said global semiconductor sales growth will slow because of falling demand for personal computers and mobile phones.

``Expectations in technology, almost alone among sectors, were probably too high,'' said Fritz Meyer, senior investment officer at AIM Investments, which manages $150 billion in Houston.

Futures also declined before a report that may show consumer sentiment fell in February as fuel prices rose. An increase in jobless claims yesterday helped reinforce investors' concerns that economic growth may be slowing.

Standard & Poor's 500 Index futures expiring this month dropped 7.70 to 1397.20 as of 8:51 a.m. in New York. Dow Jones Industrial Average futures declined 57 to 12,195 and Nasdaq-100 Index futures fell 17.75 to 1740.

Weekly Recap

Stocks are headed for their worst week since April 2005 after a plunge in Chinese shares helped spark a global selloff. Slowing profit growth, a rise in mortgage delinquencies and signs that U.S. manufacturing is contracting have raised concern the economy may slip into a recession.

So far this week, the S&P 500 and Dow have fallen 3.3 percent, while the Nasdaq Composite Index, which gets 40 percent of its value from computer shares, has dropped 4.4 percent.

Investors should cut their equity holdings and buy government bonds because the current selloff isn't over, according to Dresdner Kleinwort, the top-ranked strategy team in the world.

info:
http://www.bloomberg.com/apps/news?pid=20601084&sid=aC80NJC6SQcg&refer=stocks

 

[Ichiro]

3mar-U.S. Stocks Drop Again as Confidence Falls; Home Depot Retreats (I am sure that the hedge funds are taking a big hit-- why? They are getting hit with the yen carry trade unwinding and also that their stock investments are turning sour. If the yen appreciates below 116, watch out!!! It will not only cause the hedge funds to dump more of their stock investments which are already dropping also the appreciation of the yen will cause them to have a negative return. Since the appreciation of the yen is only temporary, it will have a negative impact on the I fund once the yen depreciates to 120 in the near future. Well, see you all in a week.. I am going on vacation!)

By Eric Martin

March 2 (Bloomberg) -- U.S. stocks dropped to a three-month low, completing their worst week since January 2003, after a decline in consumer confidence magnified the risk profit growth will be wiped out by a recession.

Home Depot Inc., the biggest home-improvement retailer, slumped for a 12th day as data this week showed new-home sales declined the most in a decade. Alcoa Inc., the largest aluminum maker, and Exxon Mobil Corp., the biggest energy company, led the Dow Jones Industrial Average lower on speculation a weakening economy will reduce demand for metals and oil.

The Standard & Poor's 500 Index retreated 16, or 1.1 percent, to 1387.17. It dropped for the third time in the four days since a plunge in Chinese shares helped spark a worldwide rout. Slowing earnings growth, a rise in mortgage delinquencies and signs that U.S. manufacturing is contracting have sent the index down 5 percent since it reached a six-year high on Feb. 20.

``We've been long overdue for a correction,'' said Eric Teal, who oversees $6.5 billion as chief investment officer at First Citizens BancShares Inc. in Raleigh, North Carolina. ``The fact that it was a little more panic-oriented should not surprise too many people.''

The Dow average decreased 120.24, or 1 percent, to 12,114.10, the lowest since Nov. 10. The Nasdaq Composite Index fell 36.21, or 1.5 percent, to 2368.

Global Retreat

Today's retreat followed a fourth straight drop in Europe and a slide in Asia that completed that region's worst weekly performance since July. The Dow Jones Stoxx 600 Index fell 0.3 percent, while the Morgan Stanley Capital International Asia- Pacific Index lost 0.8 percent.

An indicator that measures the rate of expected stock-market swings rose. The Chicago Board Options Exchange SPX Volatility Index, known as the VIX, surged 18 percent and closed above its level on Feb. 27, when stocks had their worst rout in four years.

info:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aeHgcxw.59VA&refer=home

 

[Ichiro]

16mar-Jim Rogers Sees U.S. Property Crash

source:Moneynews.com--14 mar 07
Wednesday, March 14, 2007 2:07 p.m. EDT
MOSCOW -- Commodities investment guru Jim Rogers stepped into the U.S. subprime fray on Wednesday, predicting a real estate crash that would trigger defaults and spread contagion to emerging markets.

"You can't believe how bad it's going to get before it gets any better," the prominent U.S. fund manager told Reuters by telephone from New York.

"It's going to be a disaster for many people who don't have a clue about what happens when a real estate bubble pops.

"It is going to be a huge mess," said Rogers, who has put his $15 million belle epoque mansion on Manhattan's Upper West Side on the market and is planning to move to Asia.

Worries about losses in the U.S. mortgage market have sent stock prices falling in Asia and Europe, with shares in financial services companies falling the most.

Some investors fear the problems of lenders who make subprime loans to people with weak credit histories are spreading to mainstream financial firms and will worsen the U.S. housing slowdown.

"Real estate prices will go down 40-50 percent in bubble areas. There will be massive defaults. This time it'll be worse because we haven't had this kind of speculative buying in U.S. history," Rogers said.

"When markets turn from bubble to reality, a lot of people get burned."

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."

 

[Tempest]

China will unravel if we go down the tubes. It will be a mess worse then 1929. He is not going to be any safer sitting on his bags of money in Shanghai.

 

[merlin]

Ditto