Hedge fund manager Kyle Bass issues a fire warning to Western investors with equity stake in Chinese companies or government bonds. The warning is derived from both moral and self-interest perspectives.
Morally, Bass argues in a recent interview with Wealthion, investing in China helps to prop up one of the most flagrant abusers of basic human rights in our time. He also argues that divesting from China is in every foreigner’s self-interest as he sees the prospect of an economic war between the U.S. and China to be quite probable.
As Bass puts it, “I think it’s inevitable that they [China] move on Tawain… That changes the whole ballgame for people that have money invested in Chinese companies. They need to get it out right now.”
On the topic of removing China from SWIFT, Bass says that “behind the scenes we are talking about it right now.” Bass sits on an advisory board to the Department of Defense and is privy to these sorts of national security discussion.
The implications of such a geopolitical event would be massive.
It might mean China cutting on trade with the U.S. or a flash offloading of China’s Treasury Bond reserves, valued at over one trillion dollars.
Bass points out that China manufactures 95% of the pharmaceuticals we use here in the States.
To emphasize the gravity of this, Bass reminds listeners of early 2021, when the Biden administration attempted to launch an investigation into the origins of COVID. In response, the CCP threatened to withhold pharmaceutical exports.
The investigation promptly ended.
China, on the other hand, has several weak points of its own. It is far more entwined with the U.S. financial system and therefore would likely take a bigger hit from sanctions than Russia has experienced. Then again, the Ruble’s rapid rebound was shocking to most mainstream economists.
On top of that, China’s real estate market, which accounts for roughly 40% of its GDP, is showing signs of instability, leaving speculators at the whims of the ruling party. The demographics of the country have been in decline for many years now, and a massive surge in retirees without a commensurate increase in laborers has the potential to destabilize the entire economy.
Overall, Bass thinks we are entering a period of increasing volatility, especially for the month of September. He advises caution to investors and suggests that now is likely not the time to be invested in any markets. When stocks do become cheap, it’s his belief that the U.S. market will remain dominant; there are simply too many structural issues in both China and Europe.
Tune in to his full interview below to learn about specific investments Bass is making:
Tue, 08/30/2022 – 15:40
Go to Source
Author: Tyler Durden