Chanos on Charlie Rose: China Property Bubble, RMB Devaluation? (FXI Analysis)

Hedge fund manager, short seller, Jim Chanos was on Charlie Rose tonight giving his view on China.  If you didn't already know (see presentation video), Chanos believes China has a huge real estate bubble and thinks the RMB could depreciate, taking the other side of the consensus view that China should de-peg the Yuan from the US Dollar to set global trade free. This is just a preview.
"So supply will equal demand at some point, it always does and then there's this precarious tipping point where suddenly you can't sell a project and then it's just as if everyone from the port side of the cruise ship goes to the starboard side of the cruise ship all at once. You get a tipping point. You get this sort of light bulb moment, 'I got to get out while I can', and the buyers dry up"....

"One of the most obvious trades of the world right now is that the RMB, the Yuan, is undervalued"... "Everyone is assuming that China needs to peg its currency higher to avoid the export deflation that's going on. Well Chinese exports aren't the problem here and what if it turns out that by having to nationalize lots and lots of real estate bad debts, the RMB is DEVALUED. That's something nobody is expecting, particularly all the hot money that's going into China".

Interesting about the RMB. Is he trying to play China's real estate market like the U.S in 2005? (AAA debt turned sub-prime). For recent posts on Jim Chanos click the link.  I also provided a chart of $FXI  (iShares China 25 Index Fund) below the video. Click here for recent posts on Chinese real estate stocks and the Hang Seng Property Index a few months ago. There were record breaking deals going on at that time.

FXI 5-year Chart (courtesy of

FXI 1-year (recently took out downtrend, now testing 45/56 ceiling)


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