InvestIdeas

Jim Chanos, a famous short seller, thinks Dubai is merely the camel's nose in the tent, so to speak.

"China is Dubai times 1,000...if not a million."

El-Erian on the diff between Dubai and China in this video (~5th minute)...

http://www.cnbc.com/id/15840232?video=1346140975&play=1

... though Dubai is part of UAE

Master short seller Chanos: These industries will be crushed
By Dan Ferris in the S&A Digest:

After covering his automotive short sales in late 2008 and early 2009, Kynikos Associates founder Jim Chanos is jumping back in. In a recent CNBC interview, the short-selling guru said the automotive sector – here and in Europe – is in trouble.

The sector has historically lost money, and it's currently dealing with a massive, worldwide overcapacity and legacy costs. While he wouldn't give specific picks, Chanos said he wouldn't "be long" Fiat or Ford.

Chanos also believes a massive bubble is forming in China. He thinks China is misstating its GDP numbers by "underdepreciating a shaky capital base." Just last night, Chinese authorities talked about increasing loan volume by another $1.2 trillion. On the topic of credit excesses, not valuation excesses, signaling inflation... Chanos says there's "no bigger credit excess than China right now."

Chanos is shorting China through the Hong Kong-listed "H shares." He also sees short "opportunities in all commodities producers." If, as Chanos predicts, China is fudging its numbers, its forecasted commodity demands will be much lower than expected. He's shorting copper, cement, and iron-ore producers worldwide.

Contrarian Investor Sees Economic Crash in China
By DAVID BARBOZA
Published: January 7, 2010

SHANGHAI — James S. Chanos built one of the largest fortunes on Wall Street by foreseeing the collapse of Enron and other highflying companies whose stories were too good to be true.

James Chanos made his hedge fund fortune predicting problems at companies and shorting their stock.

Now Mr. Chanos is betting against China, and is promoting his view that the China miracle has blinded investors to the risks in that economy.

Now Mr. Chanos, a wealthy hedge fund investor, is working to bust the myth of the biggest conglomerate of all: China Inc.

As most of the world bets on China to help lift the global economy out of recession, Mr. Chanos is warning that China’s hyperstimulated economy is headed for a crash, rather than the sustained boom that most economists predict. Its surging real estate sector, buoyed by a flood of speculative capital, looks like “Dubai times 1,000 — or worse,” he frets. He even suspects that Beijing is cooking its books, faking, among other things, its eye-popping growth rates of more than 8 percent.
http://www.nytimes.com/2010/01/08/busin ... ref=global

I follow experts who are good in their field. The stocks that he shorted are US companies who follow US rules.

Does he know what's going on in China ? How many times has he been to China ?

Be careful about looking at China through an American lense. Things are very different from the US. They dont follow market economy and they can easily change the rules of the game beyond your understanding..

I'm sure he's a smart guy but for this one and the guy at Forbes, Gordon Chang, I would be quite stupid to be following their calls outright. Does not hurt to be cautious though ..

W - here's the rebuttal you are looking for.

Jim Chanos Is Wrong: There Is No China Bubble
Shaun Rein, 01.11.10, 03:53 PM EST
He misunderstands basic facts about income, real estate and the currency there.
http://www.forbes.com/2010/01/11/china- ... popstories

He actually sounded very reasonable on CNBC just now.

Key takeaways:-

1) He's not saying that there would be a crash on the SSE

2) He's saying that there's a lot of unproductive infrastructure being built

3) There's too much Commercial Properties being built. It's about a 5 foot by 5 foot cubicle being built for every citizen.

4) He does not believe the numbers of China. ( Who does ? Everyone is just looking at the underlying trend )

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By the way, there's a very good article on the idle capacities in China in today's SCMP. New Steel factories are sitting idle. The 4 block commercial complex + it's 6 star hotel, next to the Bird Nest, is empty etc..

winston wrote:4) He does not believe the numbers of China. ( Who does ? Everyone is just looking at the underlying trend )

I believe....many of us don't believe in ANY numbers.

Fed figures...accurate or not?

Citi's assets?

Analyst reports...

And the numbers we believe in (or have to believe in)
- stock price (go up , go down)
- and its impact on our profit or loss

I'm confused. The following is from an earlier article:-

Chanos is shorting China through the Hong Kong-listed "H shares." He also sees short "opportunities in all commodities producers." If, as Chanos predicts, China is fudging its numbers, its forecasted commodity demands will be much lower than expected. He's shorting copper, cement, and iron-ore producers worldwide.

And the article below say's he's not betting. Maybe he's not betting the SSE will drop but he's betting H Shares will srop and shorting commodities producers.

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Jim Chanos: Actually, We're Not Betting Against China by William Wei

Jim Chanos continues to make the rounds, explaining his controversial (though increasingly less so) view on the Chinese bubble. A point he emphasizes: he's not betting against China, the economy, or currency. He's specifically negative on property. How's he betting on that? Betting against the companies that supply raw materials for the building boom -- iron ore, construction etc.

http://www.businessinsider.com/jim-chan ... ina-2010-1

On CNBC now. Let's see what he says about China and Commodities ...