Kynikos Associates' Jim Chanos: China Overheating ~ market folly

Thursday, February 4, 2010

Kynikos Associates' Jim Chanos: China Overheating

Kynikos Associates hedge fund manager and renowned short seller Jim Chanos recently gave an hour-long presentation on China and below you'll find the video on his thoughts. Chanos wants to make it clear that they are not calling for an "impending crash" in China. They are merely concerned about the risks having taken a closer look at things.

The main point Chanos makes is that, "GDP drives economic activity in China, and not vice versa." He also goes on to note that while he doesn't want to focus on politics, you almost have to when it comes to China, as it has a direct impact on their economy. He also draws special attention to China's fixed asset investment as a percent of GDP growth. He notes that by this metric, no one has done more than 33% growth for 9 years and China is well on their way to blowing these records out of the water. This figure is growing at levels well above depreciation allowances. This means that all the projects they're creating better be economic, otherwise there is bound to be problems in the future.

Embedded below is the full video presentation from Chanos:

In terms of other recent insight from Chanos, we covered in December that he was shorting automakers. For other insight from the Kynikos manager, head to an in-depth interview with Chanos, as well as his presentation on ten lessons from the financial crisis.

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