Mark Hart, based out of Fort Worth, TX, successfully bet against the US housing crises, generating a six-fold return. His encore was predicting the European sovereign debt troubles, before turning his attention to China. The China Opportunity Master Fund is set up to burn 20% of capital a year on sovereign and corporate Credit Default Swaps, interest rate CDS, and FX Options. This compares to an 8% burn rate in John Paulson’s fund dedicated to speculate on the US housing implosion.
Hart cites familiar themes of overcapacity in Raw Materials and Property Construction, combined with dubious accounting in banks and government statistics, joining Jim Chanos, Hugh Hendry, Ken Rogoff, Pivot Capital and us here in seeing turmoil ahead for Kung Fu Panda.
- China has consumed just 65% of the cement it has produced in the last six years
- There are 200m tons of excess steel capacity, more than the EU and Japan’s total production this year.
- Excess floor space exceeds 3.3 billion square meters and there are still 200m being built this year
- The price to rent ratio is 39.4 times versus 22.8 times in America before the housing crises
- Banks are hiding their exposure in Local Investment Vehicles
- On a Sovereign level, China’s debt to GDP comes out at 107%, five times published numbers.
source : UK Telegraph
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