Jim Chanos, CEO, Kynikos, the markets' biggest short seller, says his skepticism about the China miracle is growing, that he is finding the China story harder and harder to believe.
Major investors are starting to question whether Beijing is telling the truth. "I think the story is getting harder and harder to believe," says widely followed billionaire investor and hedge fund manager Jim Chanos.
"And I'm not the only guy crying about the data coming out of China. You are seeing a lot more articles being written about it, a lot more skeptical voices being heard about just how accurate some of this data showing this Chinese miracle. And the fact of the matter is I don't think it’s very accurate at all."
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Chanos' thoughts are very similar to those of Hugh Hendry, CIO, Eclectica Asset Management, whose China field-trip video describes what is going on in some parts of China. Hendry takes us on a tour of Guangzhou, a tier 2 Chinese city, home to more than a few empty billion-dollar buildings.
This is in sharp contrast to the views of Ken Fisher (one of my investing heroes of days gone by - one of the great and most interesting Forbes columnists), CEO, Fisher Investments, son of Buffett mentor, Phil Fisher, who is currently overweight in Emerging Markets positions in China, India, Brazil.
Fisher predicts Chinese stocks will lead the bull market in global equities, as a 4 trillion yuan ($586 billion) stimulus package and record lending spurs growth in the world’s third- largest economy. Economists anticipate China’s gross domestic product growth will accelerate to 9.5 percent next year from 8.3 percent in 2009, according to a Bloomberg survey conducted the week ended Aug. 28.
“It’s perfectly justified why China has been the best performing market since the Lehman collapse,” Fisher said. “It has a lot of monetary and fiscal stimulus behind it. China is the driver of the V."
Bottom line: Chanos believes that the Chinese are misusing their financial resources in a fashion similar to the former Soviet Union, spending on money losing projects for which there is in some cases no capacity utilization. Fisher believes that China's 4-trillion yuan ($586-billion) stimulus is keeping the global economy afloat and the driving force behind the V-shaped recovery in stocks (he also believes that this is not a sucker rally)
Sources: CNBC.com | Bloomberg | GreenLightAdvisor.com
