Jim Chanos, a prominent short-seller, founder and president of Kynikos Associates said China’s economic slowdown is “worse than you think” during an interview with CNBC’s Fast Money: Half Time Report on Friday. The S&P 500, Dow Jones Industrial Average, and NASDAQ are moving down to its worst weeks since 2011.
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“Whatever you might think, it’s worse”, he told CNBC.
Investors continue to sell their stockholdings amid the lingering concerns regarding China’s economic slowdown. He can’t tell whether the decline is a correction or we are entering a bear market. “Whatever you might think, it’s worse”. Chanos unveiled a bet against the stock Friday, outlining its continued losses and what he sees as weakness in its operating model.
“The biggest lesson of the last three months, for me, is that people are beginning to finally realize that the Chinese government is not omnipotent or omniscient”.
Chanos said the Chinese government’s reaction to a stock spike, “panic responses” from investors and recent currency devaluation has “given investors pause”. “Despite Meg’s best efforts, I think they’re in businesses that are in secular decline”, he said.
“Solar is a transformational industry, and it’s going to be a great thing and part of it is because cost for everything keep coming down”, Chanos said.
Chanos reiterated his opinion that investors should focus less on the Shanghai Composite index and more on economic data such as China’s declining GDP growth rate. We’ve been bears because of the credit situation in China. The message of the prior two regimes was that China is open for business.
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Earlier Friday in China, the preliminary Caixin/Markit China Manufacturing Purchasing Managers’ Index (PMI) stood at 47.1 in August, well below a Reuters poll median of 47.7 and down from July’s final 47.8.
