I believe this video is worth watching. Chanos’ argument was very convincing and made him stand out against the China bull next to him. Chanos’ reasoning was convincing in the sense that he presented figures and facts, and reached his conclusion based on sound theoretical foundation. Read the rest of this entry »
Archive for category Bear China (唱衰集团)
Toyoo Gyohten is the president of the Institute for International Monetary Affairs (IIMA) and senior advisor to Bank of Tokyo-Mitsibushi. Recently Gyohten told media his view on China’s economic growth and RMB. In Gyohten’s view, China’s economic growth is facing three risks: 1) Aging of population; 2) increasing cost of production such as energy, water, etc and a higher focus on environment protection; 3) competition from other Asian economies such as India, Vietnam and Indonesia. According to Gyohten, China’s economic growth will slow down to 5% a year during 2020 and 2030, and he sees it a prudent forecast.
Hugh Hendry is the CEO and partner of Eclectica Asset Management. With a strong Scottish accent, Hendry is a frequent guest to TV interviews such as BBC, Bloomberg and others. Recently Hendry told his investors through the investment letter that he is bearish on China’s growth and he thinks the best way to short China is not to sell equity, but to buy CDS on Japanese cyclical big corporations. The reason is that it takes time for the theme to unfold and it would be too risky to short directly. Hendry claims that he has a huge bet of 2 Billion USD on a Japanese meltdown triggered by a slow down in China.
Michael Pettis is a Senior Associate at the Carnegie Endowment for International Peace and a finance professor at Peking University’s Guanghua School of Management, where he specializes in Chinese financial markets. Pettis has taught Finance and Economics at Tsinghua University’s School of Economics and Management and Columbia University’s Graduate School of Business. Pettis has a Blog on Chinese Financial Market which is very popular.
Pettis has offered unique insights on the economic and financial situation of China, thanks to his long living experience in Beijing. Pettis has long held the view that China’s consumption has been artificially suppressed due to government’s policy to keep the interest rate at an excessively low level long below the long term economic growth rate. Such a policy has encouraged business owners to borrow at an artificially low level at the cost of lenders (consumer depositors). Such a structural misalignment impedes China from changing into a more consumption oriented growth model. Read the rest of this entry »
Nouriel Roubini has a nickname of ‘Dr Doom’. Recently on the interview with Bloomerg, Dr Roubini opinions that there is significant risk of slowdown in China. Read the rest of this entry »
Mark Faber is the author of ‘Gloom, Doom and Boom’. He is originally from Switzerland but has lived in Asia for long. Faber think that there is a bubble going on in China, Read the rest of this entry »
Edward Chancellor is the author of “Devil Take the Hindmost: A History of Financial Speculation” (1999), chosen as a New York Times “Notable Book of the Year,” and ranked as one of six indispensable investment classics by Money magazine. He is also editor of “Capital Account: A Money Manager’s Reports on a Turbulent Decade” (2004), a first-hand account of the speculative mania of the late 1990s and its aftermath.
Edward Chancellor has expressed cautious views on China repeatedly in the last five years. The most recent one is a report that Chancellor wrote for GMO White Paper, called ‘China’s Red Flags’ (Read Report from Scribd). In this excellent report, Chancellor highlighted ten aspects of a typical financial bubble. After comparing the current China to these features, Chancellor concluded that China is showing a sign of bubble in most of the aspects that are representative of a bubble, and as a law of nature, bubbles tend to burst sooner or later. Read the rest of this entry »
Andy Xie is an independent economist based in Shanghai, and the former Morgan Stanley star chief Asia-Pacific economist. Andy Xie is famous in the investment circle for his contrarian and provocative views. Xie has a strong view that China is in the process of creating one of the biggest bubbles in history, especially in real estate market. According to Xie, the housing price in China has gone too far away from its intrinsic value way beyond the affordability of Average Joe on the street. To make matters worse, Xie doesn’t see central government’s recent effort to curb housing price effective at all. On the contrary, Xie sees the local government ready to unleash another fresh round of property inflation (Read Article from Caixin) in the near future. By the law of economy, bubble is set to burst, by when the economy will be hit hard and people will suffer.
Despite Xie’s seemingly exaggerating view, I sideline with him that the property bubble in China seems in the formation without a single doubt. The question is when the D day would come, or maybe it will never come as the bubble could be ‘grown’ away given the super bullish outlook of China’s growth prospect. In fact, the China ‘growth’ story is the most frequent, and probably the only robust reason that China Bulls cite when they talk about asset prices in China, be it equity or property. After all, China has delivered a phenomenal story in the past thirty years, which is unthinkable in the box of conventional economic theories. Read the rest of this entry »
Jim Chanos is the president and founder of Kynikos Associates, a New York City Investment Company that specializes in Short Selling. In October 2000, Chanos started to research on Enron Corporation, and concluded that the management was overstating the earnings. Accordingly Chanos started to short the share of Enron. During the same time, Enron’s share price dropped from $90 to $1 within a period of 12 months.
In January, 2010, Chanos opinioned that there is a huge property bubble in China (Read Article from NYT) which might bust any time. According to Chanos, China’s property problem is ‘one thousand times of Dubai’ (Watch a video click of Chanos Presentation Here). The main reason for Chanos to be bearish on China is the excessive capacity that seems mounting in a few heavy industrial sectors such as steel, cement and construction. Some notable examples include an empty city in Ordos (Read Article from Chinatells) and huge idle production capacity of iron steel (Read Graph from Chinatells). Therefore China could be potentially a good candidate for Chanos’ short selling list. Read the rest of this entry »
Vitaliy Katsenelson is a Director of Research at Investment Management Associates. He immigrated to USA from Russia in 1991, and he is the author of ‘Active Value Investing Making Money in Range Bound Markets’.
Katsenelson made a compelling presentation in February, 2010 (Read the Presentation Here) that China’s collapse will come sooner rather than later. Katsenelson theorizes there are three stages of of crisis phases: 1) Late Stage Growth Obesity; 2) You Lie; 3) Super Steroids R Us. According to Katsenelson, China now is already at the third stage of crisis, therefore a collapse might happen any time from now. Katsenelson makes an analogy that China is like a running bus with a bomb as storied in the movie ‘Speed’. If the bus runs below 50 mph, the bomb will explode. Similarly, if China’s economic growth slows down to below 8% annually, all kinds of problems will surface and all small probability ‘black swan’ incidents will happen.
I think there is a good point from Katsenelson’s presentation that China will face a lot of problems if the economy slows down. Read the rest of this entry »
Nouriel Roubini is a professor of economics at the Stern School of Business, New York University and chairman of Roubini Global Economics, an economic consultancy firm. The New York Times labeled him “Dr. Doom”, whereas, in hindsight, IMF economist Prakash Loungani has called him “a prophet”.
Doctor Roubini wrote on Forbes as of April 1, 2010 (Read Article here) that China is likely to be labeled as ‘currency manipulator’ by USA. According to Dr. Roubini, ‘There is no doubt that China is manipulating its currency…it looks like a duck and acts like a duck – it is clearly a Peking duck’.
To be fair, I tend to agree with Doctor Doom that China’s FX policy shows a sign of manipulation in the last 12 months by ‘soft pegging’ the RMB to USD. It would be difficult to argue that a ‘fixed FX policy’ is not ‘manipulation’. Ironically, the pegging per se is a double edged sword. For example, by pegging RMB to USD, the trade weighted exchange rate of RMB actually appreciated significantly during Q4 ’08 and Q1 ’09 following a resurgence of USD (See Graph from Chinatells). Therefore the rate change of RMB is not a purely ‘manipulated’ one way move. By appreciating and then depreciating together along with USD, the net effect is limited change with much lower volatility, which is quite helpful to the importers and exporters (Read Article from Chinatells). Read the rest of this entry »