And so, with Chinese stocks in free fall, Bass appeared for an interview with CNBC on Tuesday to warn that it’s “impossible to discount” all the risks associated with investing in Chinese companies. Because now those risks aren’t limited to corporate malfeasance (like what happened with Luckin Coffee) but investors are now shouldering political risks that are “impossible to discount”, Bass said. Since Didi doesn’t have any assets in the US, ultimately, it will be the fund managers who decided to invest in the company who will likely face the legal repercussions. After all, they should have known better.
“Even Stevie Wonder could see what’s going on…it’s easy to see, once you understand the fundamental ideology of China, all of the things that are happening today are impossible to discount, they’re easy to see coming. Chinese companies won’t submit themselves to audits…now you have to pay Xi Jinping risk. How can you pay a multiple…will all that risk in front of you. This is going to be a panacea for lawyers when they start bringing lawsuits against fund managers…there is no defense for a fiduciary who invests in China today,” Bass warned.
But for years, many American investors were blinded by the promise of access to China’s vast market. Now, Bass says more of his colleagues are dumping their China and Hong Kong holdings.
One of the biggest questions plaguing American investors since China rug-pulled the Didi listing is why would Beijing kill the “goose that lays the golden eggs” that is access to American capital markets. Bass explained that right now, maintaining stability and order at home are much greater priorities since China still has nearly 1 billion people living in poverty, according to Bass.
— Read on www.zerohedge.com/markets/kyle-bass-says-there-no-defense-investing-china-warns-covid-likely-bioweapon