Interesting comments here from GMO’s Peter Chiappinelli today. He says China is the “mother of all bubbles”, a theme that he’s not alone in believing. My position on China has always been rather consistent. Something just doesn’t add up. And when things don’t add up the rational position is to just look elsewhere. There are plenty of ways to obtain indirect exposure to emerging market growth. The full interview can be read here.
“The firm is currently hedging its China exposure to near zero in the emerging-markets sleeves of its mutual funds, he said. The company has also taken a net short position on China in the hedge fund it operates.
The problem Mr. Chiappinelli sees is that there’s going to be no easy way out of the bubble that exists in China’s infrastructure and real estate.
“China is experiencing the mother of all bubbles,” he said today at the Bloomberg Portfolio Manager Mash-up in New York. “We don’t know when it’s going to pop or what’s going to cause it to pop, but there’s very little track record of countries successfully navigating a soft landing out of a bubble,” he said.”