Carson Block Says He's Certain China Will Face Day of Reckoning

[cyclone]

Carson Block Says He's Certain China Will Face Day of Reckoning

by Ben Bartenstein  and Erik Schatzker
May 25, 2017, 3:08 AM GMT+8

Carson Block said he will continue wagering against Hong Kong-listed companies on the view that a pullback in credit will send shock waves through the economy.

Block, the founder of Muddy Waters LLC, said in an interview that China’s credit problems since the global financial crisis will reach a breaking point. He blames this on Chinese officials cramming liquidity into the banking system, which allowed other players to pull their cash out, leaving the system increasingly vulnerable to collapse, he said.

"At some point, your past sins catch up with you," Block said in an interview on Bloomberg Television. "Ultimately, there will be a day of reckoning, and I know that. I just can’t tell you if that’s in two months, two years or 20 years."

More details in https://www.bloomberg.com/news/articles/...-reckoning

[luckystar]

Why the Ang Mohs so interested to talk bad about china? Whereas although US is technically BANKRUPT, we don't hear Chinese bad mouthing the US.

[specuvestor]

Frankly I think many times they are not familiar with Asia. To Europe, Emerging markets are Middle East and North Africa; to US emerging markets are Latin America and Carribean. It's familiarity bias and all these places had their busts, even Puerto Rico, a US territory.

Eventually a stopped clock will be right not once but twice a day. Meanwhile they just have to hold the faith like this one:

https://www.valuebuddies.com/thread-8157...#pid139916

[luckystar]

I just find it disgusting they like to bad mouth others. Just trying to make a name for themselves, want a celebrity status.

[TTTI]

"Ultimately, there will be a day of reckoning, and I know that. I just can’t tell you if that’s in two months, two years or 20 years."

...duh.
I also know that.

Being early/late, is no different from being wrong.

[YMPL]

"Ultimately, there will be a day of reckoning, and I know that. I just can’t tell you if that’s in two months, two years or 20 years."

...duh.
I also know that.

Being early/late, is no different from being wrong.

I also know crisis will come for all stock exchanges, but I can't tell you the exact year. 

[luckystar]

These ang mohs are very good at wearing nice suits and talking nonsense only. What the hell. Ignore them. They are mouth pieces of the west, afraid of China's rise. In a few years' time, China GDP will be greater than that of the US. The US is loath to call other country 大哥！ Move over United States!

[MINX]

"Ultimately, there will be a day of reckoning, and I know that. I just can’t tell you if that’s in two months, two years or 20 years."

...duh.
I also know that.

Being early/late, is no different from being wrong.

He cover himself really well on all sides....

[Duskerdawn]

I am going to first state that I do not think everyone should flame Carson Block entirely. 

Before all of you continue flaming him because of our internal bias that he seems to be attacking China (aka us as Chinese).  
Even here on this forum under this post:
(https://www.valuebuddies.com/thread-5667.html) Many of us agree and state it clearly under our own rules of thumb that we should not invest in S-Chip Companies (i.e. Chinese companies listed on the Singapore Exchange).

I think everyone who wants to criticize him should at least try to understand his point of view before doing so. You should really read all the research he has done before you make your judgement of him. 
(http://www.muddywatersresearch.com/research/)

Some facts I note:
1) He does very throughout due diligence of each firm he short sells before releasing his report
a) He hires the experts in the field (in Huishan's report he hired independent valuators from China to do valuation of Huishan's assets)
b) He does a lot of undercover due diligence, masking as investors and other stakeholders to find out more about the company on the ground.
c) Each report of his takes about 2-3months minimum. (I honestly believe his reports have much more content then any of your average analyst reports)

2) The track record of his short-selling reports are very impressive. You should see the aftermath of each report he has done and the final investigations into each of the firm he has written on.

3) Contrary to what you believe, he started out as a investor on the long side and has worked in Hong Kong previously for a number of years. He has, I dare say, more experience and exposure to the Chinese markets then the bulk of us investors that have not been on the ground.

So I end this here, please do your due diligence before commenting or flaming someone else. I believe he has grounds for saying that China has a lot of problems and they will face a major correction in the future.

(Disclaimer: I do enjoy reading his reports as they have taught me quite a number of things about spotting red flags and interesting ways to approach in doing due diligence, before investing.)

[Duskerdawn]

Frankly I think many times they are not familiar with Asia. To Europe, Emerging markets are Middle East and North Africa; to US emerging markets are Latin America and Carribean. It's familiarity bias and all these places had their busts, even Puerto Rico, a US territory.

Eventually a stopped clock will be right not once but twice a day. Meanwhile they just have to hold the faith like this one:

https://www.valuebuddies.com/thread-8157...#pid139916

Just a reply to that article of the hedge fund plunging in value, he has stated:

"Block said the challenge to shorting Chinese shares is weeding out companies with government support that "just won’t be allowed to fail." For that reason, he says betting on declines in Hong Kong’s Hang Seng Index is too simplistic. The key is finding industries and companies that will eventually crack regardless of what Chinese authorities do."