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The Evergrande crisis could be “worse” for Chinese investors than the “Lehman” because it points to the end of the world’s second-largest economy, says Jim Chanos, a temporary trader.
“There are many Evergrandes in China – Evergrande is one of the largest,” Chanos He told the Financial Times in an interview: “But all manufacturers look like this. The whole Chinese market is rocky,” said the founder of New York’s Kynikos Associates fund hedge, which is well-known for predicting the demise of Enron’s power company.
Problems in the world a debt collector has caused a stir in international markets this week as traders worry about what could happen if Evergrande is unable to pay off joint debt on Thursday. Such dishonesty, some say, can be found in the Asian stock market.
The real estate agent said Thursday’s domestic payments “had already been confirmed” but did not provide a clue as to whether they would give money to foreign suppliers, including several global property managers.
Advertisers agree that the Evergrande disclosure will not hurt international banks and those who will sell money on the way The failure of Lehman Brothers acted on the economic crisis, because its global debt, about $ 20bn, is small.
But its total debt is more than $ 300bn, largely due to debtors and Chinese businesses.
Chanos is one of those who warn that the country’s most lucrative economic crisis could be serious.
“In many ways you don’t have to worry about being a Lehman race but in many other places, it’s very dangerous because it’s a sign of the whole economy and the debt behind the economy,” the 63-year-old said.
Last year President Xi Jinping took action to curb China’s overpopulation, and Beijing enacted new oppressive laws in the region, which directly contribute to 29% of the country’s economy.
“If you try to get rid of this foam, it has a lot of dangers,” Chanos said. “I don’t think it’s a risk to spread the disease. This is not the case with Lehman where there are contingent banks and internal banks and everyone stops lending to anyone. This is a major economic risk because the area has a large share of GDP there. ”
Chanos says the country needs to find “new initiatives, or a little less and a little bit bigger to grow”.
“Has the Communist Party of China opposed the meaning of this? This is still evident, ”he added.
Short-term stocks like Kynikos have lost interest in short-term market movements since the financial crisis, which was only briefly triggered by the Covid-19 epidemic in 2020. Kynikos-controlled stocks fell below $ 1bn to about $ 7bn more than a decade ago.
China is a growing segment in Chanos’ mind. Kynikos has increased its appearance in China in its short-term global fund by more than 10 percent last year, including adding a few locations to HSBC and Standard Chartered, “due to getting more credit in Greater China”. Both banks are listed in London but receive the most from Asia. HSBC and StanChart declined to comment.
Last year Chanos deposited a lawsuit against Luckin Coffee, which was considered a Chinese response to Starbucks, after his opponent Mudars Waters’ Carson Block urged him to watch out. The company was investigated for accounting fraud and Chanos closed its limited opportunities to make a profit following a significant decline in its share price.
Chanos said he was also a small group of Wynn Resorts casino, which makes a lot of money from Macau, the world’s largest gambling club. “We think Macau’s collapse has just begun,” he said. Last week, the shares of the casino suffered their worst day when government officials announced a repeat of the game’s rules.
Additional reports of Thomas Hale in Hong Kong