Jim Rogers Says Japan's Falling Birthrate Raises Debt Concern

Jan. 13 (Bloomberg) -- Investor Jim Rogers, who co-founded the Quantum fund with George Soros in 1970, said he wouldn't increase his holdings of Japanese stocks because the country's falling birthrate will make it harder to pay the national debt.

Japan's record-low birthrate caused the population to shrink last year for the first time since the nation began to compile data in 1899, the health and welfare ministry said in December. That decline will accelerate should the birthrate fail to recover, Rogers, 63, said at a symposium in Tokyo on Jan. 7.

``Japanese stocks will rise further in 2006 and 2007, so I will not sell them,'' Rogers said. ``But I have no intention of buying more Japanese stocks because of the serious problem of the declining population.''

A declining workforce may reduce the tax revenue for the government, making it harder to pay back the nation's 800 trillion yen ($7 trillion) debt. The government has said that the birthrate needs to rise to 2.1 to maintain Japan's current population of about 127 million.

``If the current birth rate, which is the lowest in the major developed countries, continues, there will be no Japanese,'' he said. ``Who will pay the enormous debt?''

Japanese women have an average of 1.26 children, the health ministry said. That's compared with 2.04 in the U.S., and 1.8 in China, according to Japan's Statistics Bureau. Deaths in Japan probably outnumbered births by about 10,000 in 2005, the health ministry report said.

The nation could increase its birthrate, allow more immigrants, or accept a decline in living standards, said Rogers, adding that Japan would probably choose the last option.

Waseda's Women

Rogers said in an interview that he visited Tokyo's Waseda University to try to find out why Japanese women are reluctant to give birth. The three female students he interviewed told him they wouldn't have babies before they reach 30, because they want to focus on their careers.

At a seminar for private investors on Jan. 7, Rogers told the Japanese audience that having children was important to keep the economy growing.

He said he used to think having children was waste of time and it was better to focus on investing. He changed his mind after the birth of his daughter, now three.

``If you have no kids, it's time to get on with it, even if it means taking time off,'' he told the seminar audience.

Concern about the declining population hasn't stopped other overseas investors buying Japanese equities. Foreigners were net buyers of Japanese shares last year, purchasing a record 10.3 trillion yen worth of stocks, the Tokyo Stock Exchange said yesterday. The Topix share index has risen 41 percent in the past six months.

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