Shanghai surprise

Jim Rogers says it will be "all over for the West" once Shanghai opens up as a financial center.

The US investment guru, who has celebrity status in China, says it would be a key moment in financial history and lead to the decline of Wall Street and other international exchanges.

"Once you have free flow of capital, a transparent system and not just the full convertibility of the Chinese currency but the freedom to buy Chinese shares and commodities, then it is all over for the West," he says.

"The financial centers of the world would move to China. It is not going to happen in an afternoon but everywhere else would be finished."

Speaking from Oxford on a visit to Balliol College, where he attended university, the 69-year-old says the authorities were damaging the opportunity for China by delaying the setting up of an international board on the Shanghai Stock Exchange - a key step on the road to internationalization.

"They say they want to do it but they have been saying that for several years. They are not acting as fast as they should. They are giving everyone else the chance to gear up and compete.

"I would do it all the morning after. As the southern general said it is a matter of who gets there 'firstest with the mostest'."

Rogers, the author of A Bull in China: Investing Profitably in the World's Greatest Market, a best-seller in China, dismissed the assertion that China could not be a global financial center because it does not offer sophisticated financial services.

It currently has no facility to do derivatives and futures and options trading.

"This is 2012, it doesn't take people long to work out how to do this. All it requires is an Internet connection, a telephone, computers and a few people who can spell derivatives. Anyone could set up tomorrow," he says.

Rogers says the major barrier to foreign companies listing in Shanghai is the current exchange controls that restrict money going into and out of the country.

"The likes of Walmart and McDonald's have a great reason to list in China but they are not going to do it unless there is any activity because it would make them look foolish," he says.

He says traders and investors need to be able to arbitrage shares listed on a number of exchanges and for that capital needs to be freely flowing.

"If people can't arbitrage between markets there is not going to be any great activity or liquidity. Without a free flow of capital into those shares listed on Shanghai, the market is never going to fully develop."

Rogers, who lives in Singapore and whose two young daughters speak fluent Mandarin, says when Shanghai does become fully open it will be a similar moment to when New York took over from London as the world's financial hub in the 1920s and 1930s.

"The financial mistakes made by politicians in London such as pegging sterling to the wrong gold price led to the shift from the UK to the US," he says.

He says the New York regulatory authorities are not helping Wall Street's international competitiveness.

"At the moment America is coming up with all sort of controls and regulations that is making New York a repressive and expensive place to do business and a lot of the money wants to move somewhere else," he says.

andrewmoody@chinadaily.com.cn