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The founder and chief investment officer of Hayman Capital Management is positive about China, and economic and political reasons underlie his long-term bearish outlook on the world’s second-largest economy.
“I want to be realistic: are they going to make money investing in China in the long term?Or will it be the Chinese Communist Party?” What I want to remind everyone is that there is nothing to be gained by investing in a totalitarian government over a long period of time. You say it’s negativity, I say that,” Kyle Bass said Monday in an interview with Bloomberg. it’s realism. “
In recent months, a series of pessimistic knowledge has spread in China and there has been the long-awaited rebound of the pandemic.
The difficulties are particularly acute in China’s real estate sector. Big asset developers like Evergrande and Country Garden Holdings are on the brink of default, leading some commentators to speak of a “Lehman moment” for the country’s monetary system.
Faced with the constant emergence of negative data, officials announced this summer that the government would no longer publish reliable statistics, such as youth employment, which has risen sharply in recent years.
“The Chinese government is looking towards its currency, while in the long term the Chinese economy is on the verge of collapse and the property market is collapsing,” Bass said. “All personal promoters are now at one level or another of bankruptcy. And we have about $190 billion in offshore bonds, dollar bonds, to some extent in default. “
China’s slow and slow moves are less vital than the overall situation, he argued. According to him, China’s formula and policies make it an unattractive long-term option for portfolio allocation.
“I just don’t think you need to invest,” he said. I think you need to invest in markets where the rule of law prevails, where you have genuine leadership and where you have tactics to get positive returns for your portfolio. “