Sunday, September 23, 2012

"... the good things just don’t get shown to Western investors"

Via Maoxian.
Financial Review: ... “The trade over the past two years has been to be short China and go long Chinese corruption,” he says.

The trade has been a winner, with commodity prices weakening and Chinese stocks cooling. “But Macau casinos, and companies that sell $500,000 watches and $3000 a bottle cognac have been very strong. These are straight derivatives of Chinese corruption,” Hempton says.

Bronte has a strong track record picking Chinese frauds on global exchanges in sectors including cement, travel, medical products and education. By its estimates, it has successfully shorted more than 40 Chinese stocks.

“We really do have a hard time finding one that is honest, and we sincerely want to so we can hedge our short positions. There are a lot of good things going on in China. But the good things just don’t get shown to Western investors.”

1 comment:

Richard Seiter said...

Seems like a variation on a classic response to financial hucksters: "If it is such a good investment why are you telling me about it rather than investing in it yourself?"

Important to remember this statement from the article: "It’s a stark demonstration of the power of the market to move violently against short positions that are ultimately proved correct. Even for a short seller who has absolute conviction, fake announcements, extensive stock promotion and the rising tide of a bull market can easily squeeze them out."

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