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Billionaire Investor Grows Deeply Concerned About China

Friday, 8 Jan 2010 | 6:08 PM ET

A widely followed billionaire investor is raising serious concerns about China and it appears more people are taking notice.

In Friday’s New York Times the paper reiterated something billionaire hedge fund manager Jim Chanos first told the Fast Money desk, on the December 15th Halftime Report – that China has the potential to be as much of a watershed event for world markets as subprime was a few years back.

A celebrated short-seller, Chanos isn’t the first person to turn bearish on China, but his commentary is widely followed because he has a knack for spotting looming problems, including Enron, Tyco, and the housing crisis.

And speaking of housing, Chanos thinks China’s troubles will stem from a real estate crisis – much like our own troubles did.

Fast Money Halftime Report: Chanos
James Chanos, legendary hedge fund manager and president of Kynikos Associates, makes a special appearance on today's Fast Money Halftime Report to discuss financials and the markets. Fast Money trader Guy Adami comments on a few of Chanos' recommendations.

”(China) is a surging real estate sector buoyed by a flood of speculative capital,” he says. “It looks like Dubai times 1,000 — or worse!”

And to make matters that much more ominous, he feels Americans are investing in China without really grasping how the government works.

“We just don’t believe the GDP numbers. We think they’re massively inflated by under-depreciating a very shaky capital-asset base.”

All these elements have the trappings of a bubble, Chanos says, and one which may soon burst. If and when that happens, Chanos expects companies will fail. As a result he’s actively shorting China.

"I’m looking for plays on the China investment boom, which we think will burst at some point,” he said in the middle of December. “Demand in China is over-inflated, that is clear."

What do you think? We want to know!





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Trader disclosure: On Jan 8th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Najarian Owns (AMAT) Calls; Najarian Owns (TEVA); Najarian Owns (CELG); Najarian Owns (PCX) Calls; Najarian Owns (CLF), Is Short (CLF) Calls; Najarian Owns (FCX), Is Short (FCX) Calls; Najarian Owns (MS), Is Short (MS) Calls; Najarian Owns (PFE) Stock; Najarian Owns (TCK), Is Short (TCK) Calls; Najarian Owns (XLF) Calls; Finerman Owns (AAPL); Finerman's Firm Owns (AXL), (AXL) Calls; Finerman's Firm And Finerman Own (GOOG); Finerman's Firm Owns (JPM) Calls; Finerman's Firm Owns (BAC) Preferred, (BAC), (BAC) Call Spread; Finerman Owns (BAC) Preferred, (BAC); Finerman's Firm Owns (IBB), (CSCO), (MSFT), (NDAQ); Finerman's Firm Is Short (TLT); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman's Firm Is Short (IJR), (MDY), (SPY), (USO), (UNG); Grasso Owns (ABK), (AAPL), (ASTM), (BAC), (BGP), (C), (COST), (CSCO), (FAZ), (PFE), (PRST), (WMT), (V); Terranova Owns March British Pound Futures; Terranova Is Long Copper Backwardation: Long May 2010, Short July 2010; Terranova Is Short (CMA), (JCI), (ESS), (ICE), (SHLD), (CAL); Terranova Owns (XHB) Puts; Terranova Owns (QCOM), (MSFT), (EMC), (FTO), (XOM), (BAC)

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