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Alternative Market Briefing

Asian hedge funds must plan for a potential China crash

Wednesday, December 17, 2014

Komfie Manalo, Opalesque Asia:

Asian hedge fund managers must brace themselves for a possible China crash as the socialist states appears to be heading towards slower growth, according to William Pesek in an article written for Live Mint.

According to Pesek, hedge funds that bet against China have not done very well in the past. The Chinese government announced this week it would revise the 2013 GDP figures upward by as much as $275bn. This move will show that Beijing met its 7.5% growth target last year, at least in papers.

However, "for anyone who thinks China is operating even close to that number, though, I have two words: iron ore. Even more than the precipitous drop in oil, the halving of prices for these pivotal rocks and minerals — as well as a 44% plunge in oil and tumble in coal and other commodities — suggests that China may be braking rapidly. It’s important to remember that however large, China’s economy is no more developed than South Korea’s was when it imploded in 1997," Pesek said.

He went on to say, "My question isn’t so much whether China will or won’t crash. It’s whether the rest of Asia is ready for the possibility of 5% or even 4% Chinese growth, as predicted by pundits like Larry Summers and Marc Faber. It’s almost certainly not."

Asia hedge funds more resilient than their Western p......................

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