China Crash ‘Way Bigger Than Subprime’ for Billionaire Singer
2015-07-15 19:20:45.962 GMT
By Beth Jinks and Simone Foxman
(Bloomberg) -- Hedge fund manager Paul Singer said that
China’s debt-fueled stock market crash may have larger
implications than the U.S. subprime mortgage crisis, echoing
warnings from fellow billionaire money managers Bill Ackman and
Jeffrey Gundlach.
“This is way bigger than subprime,” Singer, founder of
hedge fund Elliott Management, said at the CNBC Institutional
Investor Delivering Alpha Conference in New York in response to
a question about China’s crash potentially affecting other
markets. Singer said it may not be big enough to cause a global
financial market conflagration.
China’s stock market has dropped from a June 12 peak wiping
out almost $4 trillion in value in less than a month after
investors who borrowed to buy shares had to unwind trades.
Markets tumbled even as President Xi Jinping’s government ramped
up efforts to stem the rout, including preventing share sales of
companies.
The threat to markets from the country is a bigger concern
to Ackman, who runs Pershing Square Capital Management, than
Greece.
“China is a bigger global threat by far,” Ackman said
Wednesday at the conference. “The Chinese stock market is a
fairly remarkable phenomenon and I think kind of a frightening
one.”
Ackman said he’s worried about China’s lack of transparency
and questioned the reliability of its economic statistics, the
same day that China said gross domestic product rose 7 percent
in the last quarter.
“If you look at the Chinese financial system, you look at
shadow banking, you look at the amount of leverage, you look at
how desperately they worked to keep the stock market up. It
looks worse to me than 2007 in the U.S,” Ackman said.
Gundlach Comparison
DoubleLine Capital co-founder Gundlach compared the stock
market there with the Nasdaq in 1999, 2000, when technology
stocks collapsed.
“China is really kind of concerning,” Gundlach said in an
interview with CNBC at the conference. “China is far too
volatile and murky to invest in.”
Mary Erdoes, chief executive officer of JPMorgan Asset
Management, said at the event that China’s equities markets
don’t reflect the economy.
“It’s been 25 years of 7 percent growth,” said Erdoes.
“No other country has displayed that. Not even the U.S. There’s
a lot going on in the economy and it’s completely disassociated
with the stock market.”
For Related News and Information:
Bill Ackman Describes Valeant as Early Stage Berkshire Hathaway
Herbalife Surges After Raising Full-Year Earnings Forecast
Zoetis to Cut Up to 25% of Workforce After Ackman’s Pressure
Allergan, Valeant and Ackman End Fight Over Failed Buyout
To contact the reporters on this story:
Beth Jinks in San Francisco at +1-415-617-7141 or
bjinks1@bloomberg.net;
Simone Foxman in New York at +1-212-617-2052 or
sfoxman4@bloomberg.net
To contact the editors responsible for this story:
Jeffrey McCracken at +1-212-617-8517 or
jmccracken3@bloomberg.net;
Christian Baumgaertel at +1-617-210-4624 or
cbaumgaertel@bloomberg.net
Pierre Paulden, Josh Friedman
2015-07-15 19:20:45.962 GMT
By Beth Jinks and Simone Foxman
(Bloomberg) -- Hedge fund manager Paul Singer said that
China’s debt-fueled stock market crash may have larger
implications than the U.S. subprime mortgage crisis, echoing
warnings from fellow billionaire money managers Bill Ackman and
Jeffrey Gundlach.
“This is way bigger than subprime,” Singer, founder of
hedge fund Elliott Management, said at the CNBC Institutional
Investor Delivering Alpha Conference in New York in response to
a question about China’s crash potentially affecting other
markets. Singer said it may not be big enough to cause a global
financial market conflagration.
China’s stock market has dropped from a June 12 peak wiping
out almost $4 trillion in value in less than a month after
investors who borrowed to buy shares had to unwind trades.
Markets tumbled even as President Xi Jinping’s government ramped
up efforts to stem the rout, including preventing share sales of
companies.
The threat to markets from the country is a bigger concern
to Ackman, who runs Pershing Square Capital Management, than
Greece.
“China is a bigger global threat by far,” Ackman said
Wednesday at the conference. “The Chinese stock market is a
fairly remarkable phenomenon and I think kind of a frightening
one.”
Ackman said he’s worried about China’s lack of transparency
and questioned the reliability of its economic statistics, the
same day that China said gross domestic product rose 7 percent
in the last quarter.
“If you look at the Chinese financial system, you look at
shadow banking, you look at the amount of leverage, you look at
how desperately they worked to keep the stock market up. It
looks worse to me than 2007 in the U.S,” Ackman said.
Gundlach Comparison
DoubleLine Capital co-founder Gundlach compared the stock
market there with the Nasdaq in 1999, 2000, when technology
stocks collapsed.
“China is really kind of concerning,” Gundlach said in an
interview with CNBC at the conference. “China is far too
volatile and murky to invest in.”
Mary Erdoes, chief executive officer of JPMorgan Asset
Management, said at the event that China’s equities markets
don’t reflect the economy.
“It’s been 25 years of 7 percent growth,” said Erdoes.
“No other country has displayed that. Not even the U.S. There’s
a lot going on in the economy and it’s completely disassociated
with the stock market.”
For Related News and Information:
Bill Ackman Describes Valeant as Early Stage Berkshire Hathaway
Herbalife Surges After Raising Full-Year Earnings Forecast
Zoetis to Cut Up to 25% of Workforce After Ackman’s Pressure
Allergan, Valeant and Ackman End Fight Over Failed Buyout
To contact the reporters on this story:
Beth Jinks in San Francisco at +1-415-617-7141 or
bjinks1@bloomberg.net;
Simone Foxman in New York at +1-212-617-2052 or
sfoxman4@bloomberg.net
To contact the editors responsible for this story:
Jeffrey McCracken at +1-212-617-8517 or
jmccracken3@bloomberg.net;
Christian Baumgaertel at +1-617-210-4624 or
cbaumgaertel@bloomberg.net
Pierre Paulden, Josh Friedman