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Kyle Bass Says There Is "No Defense" For Investing In China, Warns COVID Likely A Bioweapon

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by Tyler Durden
Tuesday, Jul 27, 2021 - 02:10 PM

With Chinese stocks in free fall, it was only a matter of time before Hayman Capital founder Kyle Bass - one of Wall Street's most vocal critics - showed up to say 'I told you so'.

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.

"I believe it's bigger than just China...given the global financial crisis in '08 and the virus crisis of the last couple of years we've seen central banks expand their money aggressively...what's happening is...the difference between the asset prices moving up, the middle class can't reach up because asset prices are moving too quickly...this is fundamentally core to what China is struggling with. They have 400MM people in the middle class, but they still have nearly 1 billion people in abject poverty. All of this is rooted in the amount of central bank expansion globally...and now what you're seeing them doing is the government now has total control...it all started with Ant Financial and now it's moving into tech into education...I talk to some of my friends who are asset managers and they are finally starting to pull out of Hong Kong...this is just the beginning."

Besides, it's not like anybody actually believes the Chinese numbers, whether it's the GDP data they released earlier this month, or corporate earnings.

"No one believes China's numbers are real...people do believe they will continue to print fake numbers and it will look like growth...on the audits themselves, there are no audits. To this day, there is no audit that's reliable on a Chinese firm," Bass said.

Moving away from the subject of markets, Bass reiterated his belief that COVID-19 was likely being developed as a bioweapon.

While Beijing has successfully swept these claims under the rug (with a little help from the mainstream US media), Bass insists that all the signs are there.

"Jon Stewart said it best 'you mean there's an outbreak of chocolatey goodness in Hershey, Pennsylvania?' If you talk to the scientists...the head of CalTech early on said we looked at this virus and the genetic makeup of the virus and the spike proteins are non-natural. The scientists that aren't paid by China that are the best geneticists in the world said it early...the fact that China won't let us in....we've essentially given the criminals a year-and-a-half to clear up the crime scene. That is not being a responsible global actor."

"And it's not just COVID - China has abdicated its responsibility toward the global community in other ways big and small. It's closed capital account is one example: it only allows money to flow in, not out."

Later, Bass tweeted that the proof is in the numbers.

Of course, as Zero Hedge learned last spring, simply daring to suggest that COVID was engineered at the Wuhan Institute of Virology is enough to get one de-platformed by Twitter.

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